These Charts Are Scary: Bitcoin Slips To Those Numbers!

Bitcoin: Bear markets have historically been challenging for traders. Traditional indicators that identify good entry points cannot predict how long a Bitcoin winter can last. So, which metrics and indicators should we look at in such a case? Crypto research firm Delphi Digital has released some charts to review. Here are the details…

Have we seen the bottom in Bitcoin price?

The recent return of Bitcoin (BTC) above the psychologically important $20,000 price level was a sign of the bottom for many traders. However, the data suggest that a short-term relief rally may not be enough evidence for a trend reversal. Cryptocurrency research firm Delphi Digital provided evidence in a recent report that suggests caution. According to the company, we need to go through a more “painful process” before we are convinced that we have seen the bottom in the market.

Despite the pain felt since Bitcoin’s price peaked in November, the comparison between that time and the 2017 market peak points to the possibility of further declines in the short term. AmkNews.com As we reported, in previous bear markets, the BTC price dropped by about 85 percent from its high to its low. According to Delphi Digital, if history were to repeat itself in the current environment, it would mean “a drop of just over $10,000 and another 50 percent drop for current levels.”

There is also a big risk for Ethereum

The outlook for Ethereum (ETH) is even worse as the previous bear market saw its price drop 95 percent from the top to the bottom. If the same scenario happens this time, Ethereum price could drop as low as $300. Delphi Digital used the following statements:

The risk of re-experiencing a similar collapse is higher than most people probably anticipate, especially if BTC fails to hold support in the $14,000-$16k range.

79040392 370c 4e4b 8406 b3d0c01e0e20

Oversold conditions apply

For traders trying to understand where the bottom is in the current market, the data shows that “previous major market bottoms coincided with extremely oversold conditions.” As the weekly chart below shows, BTC’s 14-week RSI has recently dropped below 30 for the third time in its history. The previous two events are approaching a market floor.

ce68f761 356e 4336 be5b 45a229512bab

While some may see this as a sign that now is a good time to re-enter the market, Delphi Digital has issued a warning to those expecting a “V-shaped” recovery. Bitcoin recently dropped below its 200-week SMA for the first time since March 2020. Historically speaking, the BTC price has only traded below this level for a few weeks in previous bear markets, suggesting that a bottom may be found soon. The firm used the following statements:

In the previous two examples, BTC fluctuates sideways for several months before finally staging a strong recovery. A look at the 200-week simple moving average (SMA) also raises questions about whether the historical support level can be held again.

dc8997f9 99cf 4da6 8486 306049dcaab0

Final capitulation: what happened?

What the market is really looking for right now is eventual capitulation, which historically marks the end of a bear market and the beginning of the next. While market sentiment is at its lowest point since the COVID-19 crash in March 2020, it hasn’t quite reached the depths of despair seen in 2018. Delphi Digital used the following statements:

We may need to see some more pain before the emotions hit rock bottom.

46ba7f32 2430 4b58 9029 c81f6c427a75

Weakness in the crypto market has been visible since late 2021, but the real driving force behind the market crash includes inflation and rising interest rates. Rising interest rates tend to be followed by market corrections. Considering that the FED intends to maintain the course of interest rates; Bitcoin and other risk-free assets are likely to correct further.

38512e1a 9a8c 405b a57e 081112f7f6f5

One final metric that indicates when a final capitulation event should occur is the percentage of BTC supply in profit. Most recently, this rate was 40 percent. According to data from Glassnode, this metric is currently at 54.9 percent. According to experts, this adds credibility to the idea that the market may experience another drop before the real bottom hits.

8fae435b 65d2 49cd a4b3 40edbc1e13f6

Disclaimer: The articles and articles on AmkNews do not constitute investment advice. AmkNews.com does not recommend buying or selling any cryptocurrencies or digital assets, nor is AmkNews an investment advisor. For this reason, AmkNews and the authors of the articles on the site cannot be held responsible for your investment decisions. Readers should do their own research before taking any action regarding the company, asset or service in this article.

Warning: Citing the news content of AmkNews and quoting by giving a link is subject to the permission of AmkNews. No content on the site can be copied, reproduced or published on any platform without permission. Legal action will be taken against those who use the code, design, text, graphics and all other content of AmkNews in violation of intellectual property law and relevant legislation.

Larry Brown

I graduated from Yale University, Department of Television. I have been a professional news writer for 3 years. I am continuing my career here by establishing amknews.com site 3 months ago.