On October 20, 2021, the price of Bitcoin (BTC) surpassed $66,000 and reached a new all-time high, before capturing a bull in the session of Monday November 8 and entering one of its largest historical bear markets. Today is Thursday, October 20, 2022, so the market is celebrating the 1st year of its old ATH, the time interval from October 20 to November 8.
Bitcoin (BTC): the old historical record is celebrating its 1st anniversary soon
Is BTC technically oversold after a year of bear market and fundamental global-macro crisis?
When we study the major bear markets in the short history of the Bitcoin stock market (13 year bear market study), There are 5 major low dates to note :
- November 2011 with a drop of more than 90% from the old historical record;
- January 2015 with an 80% drop from the post-ATH;
- December 2018 and -80%;
- March 2020 (the lowest point of the stock market shock due to the health crisis) and a – 72%;
- and finally, the stabilization level of the market from June 2022 and also the measurement of -72%.
So Bitcoin price has lost 72% since its all time high.or 72% for almost a year.
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The fact to stabilize the same pull down that the fall associated with the arrival of Covid-19 in the West is not enough of a sufficient argument for a low point, but when we practice technical analysis of this curve (see the graph below), especially the price/momentum approach (the momentum being represented here by the technical indicator RSI), a bullish divergence is present.
On the other hand, a trend line chart is recommended only one final cleaner dropping -80% from the old ATH (ie around $14,000 price for BTC) Could happen before a real bullish rally in the market.
Chart showing the percentage decline of BTC from all time highs
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Annual bearish momentum reaches its major low zone, watch out
More broadly, is Bitcoin price oversold in terms of momentum after this 72% drop in one year? This is an amplitude of correction that is almost as good as found on the total market capitalization of the cryptocurrency market, down 65% in 12 months.
To answer this question directly and without the language of the month, basic mathematical functions are the right tool. The relative momentum (or more simply the rate of change in % over a certain period) makes it possible to identify extreme levels of inflection of a financial asset, up and down.
The chart below shows Bitcoin’s 12-month relative momentum and historically, the market is always recovering (within the short history of bitcoin of course) having lost 75% YoY.
You can see that the curve is very close to this level, so the market will very soon choose between replaying and repeating its historical pattern Where sink and enter graphic no one’s land.
Chart revealing BTC’s 12-month relative momentum (12-month ROC)
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