Experts have named three reasons that suggest a Bitcoin bottom is forming. What are they?
On the scale of the last couple of months, Bitcoin has been trading in a fairly narrow price channel between the $18,000 and $24,000 lines. There is no noticeable volatility in the market, which only increases stagnation for most traders – everyone is waiting for the next BTC spurt in one of two directions. However, crypto analyst Yassin Elmanjra of ARK Invest and Reflexivity Research co-founder Will Clemente have reason to believe that the major cryptocurrency has already hit its bottom in this bearish trend. They cite three reasons to prove their theory, which are discussed below.
Note that investment firm ARK Invest was the subject of jokes in July. The fact is that the giant got rid of 1.4 million shares of cryptocurrency exchange Coinbase under the ticker COIN for $75 million. Accordingly, the sale price was $53, which was just above COIN’s local low of $47.
In other words, the analysts made a completely wrong decision and got rid of the asset almost at its price bottom, which traditionally causes laughter as most novice crypto investors act this way. They buy coins high and high, and sell them low and after a crash.
Coinbase COIN cryptocurrency exchange share price chart for the last six months
This situation was also particularly amusing because a week and a half later – in the first half of August – the Coinbase share price reached a local high of $98. Consequently, ARK not only got rid of the asset at the bottom, it also didn’t make a serious amount of money.
Why will Bitcoin rise?
According to CryptoPotato sources, the first reason is purely technical: it’s about the intersection of Bitcoin’s realised price lines for short-term and long-term holders. The chart below shows that such a situation has only happened three times in the history of the market. Each time, it has led to the bottom formation stage of the cryptocurrency.
As a reminder, the realised price is the value of all bitcoins at the price at which they were bought, divided by the number of coins in circulation. For long-term holders, it is more than 155 days worth of BTC; for short-term holders, it is less than that.
In general, this means that investors have an opportunity to increase their own cryptocurrency position at a favorable price, and for any time horizon. Accordingly, they buy coins and thereby prevent cryptocurrency rates from falling further.
Changes in the realised price of Bitcoin
Generally speaking, three cases are unlikely to be enough to draw a clear conclusion about the formation of any trend. However, most cryptocurrencies have already lost 70-90 per cent of their own value since the niche record in November 2021, which at least earlier was enough to reach the bottom, move to the accumulation stage and then start a new bull run.
Two more benchmarks on the Bitcoin chart are the 200-week moving average line and the average purchase price of the cryptocurrency at $19,000. So far, BTC is balancing between these two lines, so a break above or below one of them will signal further price movement for the next few months, experts say.
Bitcoin chart with 200-week moving average and average purchase price of the cryptocurrency
The second reason mentioned by experts is the capitulation of Bitcoin miners, which is coming to a close. Here’s Elmanjra’s quote on the matter.
The 30-day moving average hashed line has crossed its 60-day moving average, coming out of a period of strong contraction.
The capitulation of miners on the Bitcoin chart
In other words, Bitcoin’s hashrate has started to rise even faster, well in the past its increase preceded the rise in the price of the major cryptocurrency. There is one more thing, though: because of the increase in hash rate, the cost of mining bitcoins has come close to the market value of the cryptocurrency. Mining is now “at the bottom” in terms of profitability, so another Bitcoin price collapse could lead to a similar collapse in hash rate.
By the way, yesterday the figure set a new record: Bitcoin’s hash rate reached 316 hashes per second. Given this growth, various platforms are predicting an increase in mining complexity of as much as 8 percent, with recalculation expected within the next four days.
Bitcoin network hash rate record
Finally, the third reason is the historical high of the volume of coins in the hands of long-term holders, which stands at over 13.7 million BTC. This is a clear sign of strong confidence of large market players in the future, and it means the reluctance of experienced investors to get rid of serious volume of coins, which in theory should not create sellers’ pressure on the price of the asset.
Coin volume in the hands of long-term BTC holders
The chart above also shows the CDD trend over the past quarter. CDD or Coin Days Destroyed is a measure of the number of days coins spent on cryptocurrencies without movement before their last transaction. And it’s currently at the bottom, meaning those wanting to get rid of crypto have most likely already done so.
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There are more reasons for optimism among different categories of market players because of the arrival of October – this month is traditionally considered to be the most successful for crypto investors. You can visually see BTC’s profitability by month in the table below.
Bitcoin exchange rate changes by month
This trend has already become a meme called Uptober. The word is derived from English “Up” and “October”. As a result, Uptober can be adapted to mean “up-tober” or “rostober”. Here’s what cryptocurrency enthusiast Galois Capital tweeted about it.
I agree with the expectations about rostober. Everything looks as true as possible.
This belief contrasts with another superstition associated with traditional stock markets, known as the “October effect”. According to it, this month usually brings losses for stockholders. However, although there have been several financial crashes in October, there is no evidence that this month is “always unlucky” for the traditional financial sector.
October has a special significance for Bitcoin because on 31 October 2008, its anonymous creator Satoshi Nakomoto published the project’s whitepaper. However, the first BTC transaction did not take place until January of the following year, and mentions of the cryptocurrency itself did not start appearing in the media until several years later.
By the way, yesterday there was another important anniversary in the life of Bitcoin. The fact is that on October 5, 2009 the first Bitcoin rate in the world was published on the New Liberty Standard platform, and this happened exactly thirteen years ago. The funny thing is that at that time, 1309.03 BTC was given for one dollar.
The first official Bitcoin exchange rate on the trading platform
We think that it is impossible to be sure in the viewpoint of ARK Invest analysts to the end: after all, the cryptocurrency market is absolutely unpredictable, and the failed deal with Coinbase shares also adds certain doubts. In any case, sooner or later the abundance of news about a possible bottom in the coin industry will convince investors, who will start buying crypto-assets little by little and thereby push them higher. This will mark the beginning of the active accumulation phase, i.e. the accumulation of crypto by industry participants.
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