Is the bottom in bitcoin? Analysts say market selling is paused to continue

We haven’t reached the bottom yet.

That’s the conclusion reached by analysts at Huobi Research Institute, the research arm of Huobi Cryptocurrency Exchange, arrived at in a newly released report.

In their report entitledAnother black may comeHuobi researchers Barry Jiang and Hanson Chan wrote, when it comes to BitcoinThe bottom of the market has not yet come, and value investors should refrain from buying.

Huobi’s reasoning comes from the argument that the market is bottom Bitcoin It can be determined by examining the Unrealized Net Profit/Loss (NUPL) ratio, which is the difference between the market value of Bitcoin and the value of Bitcoin. check cap divided by its market value.

The maximum realized Bitcoin represents the realized value of all the coins in the network, based on the price at which each one is made Output of unspent transactions It was moved last. The realized capitalization does not affect lost or idle coins.

NUPL has five different classifications: euphoria/greed, belief/denial, optimism/anxiety, hope/fear, and surrender. The capitulation phase is when the price is at its lowest and therefore the best time for buyers to jump in, according to this logic. Based on the Bitcoin NUPL chart, the asset is currently in a fear rating, so it is likely that it has not yet reached its lowest price in the current session.

As a platform for on-chain data analysis CryptoQuantThe Bitcoin NUPL valuation explains, “Investors [currently] In the fear stage where they are currently making unrealized profits that are a little more than losses.”

Jiang Hubei said Decrypt Via email that he estimated Bitcoin’s bottom to be somewhere between $20,000 to $25,000. Yuya Hasegawa, market analyst for Japanese crypto exchange Bitbank, has a less sanguine view.

“From the previous two capitulation phases, we can see that the price fell from around 40-50% after the NUPL turned orange. [to Hope/Fear]. Therefore, if the pattern repeats itself, the current bitcoin price could drop to around $15,000. This is somewhat in line with my technical analysis published on Monday (although my target price is slightly lower: $12.2K),” Hasegawa said. Decrypt By email.

Today, Bitcoin broke through below $30K, hitting a low of $28,170Its lowest price since December 2020.

Image: The green is where some analysts are predicting that Bitcoin will “hit the bottom” in a declining market. From lookintobitcoin.com.

Benjamin Quinn, Crypto Analyst and CEO of Quantitative Market Analysis Platform at Cryptoverse said, Decrypt Based on a number of different metrics, “there are still more potential downsides” in the current market.

Photo: CoinMetrics/Benjamin Coin

“Straight 1 year [return-on-investment] Pointing to a chart containing data from analytics firm CoinMetrics, Cowen said there could be more downsides, adding that the number of long-term (longer than six months) bitcoin holders also stabilized a few months ago.

Photo: CoinMetrics/Benjamin Coin

Public interest in cryptocurrencies also appears to be waning at the moment, as data from social media analytics site Social Blade shows that the best crypto channels on YouTube are losing viewers across the board.

Photo: Social Blade/Benjamin Cowen

But no matter where the retail investor stands on cryptocurrency, some analysts believe that on-chain metrics like NUPL are not at all helpful in this current climate.

“To be honest, I find on-chain metrics somewhat useless in the current market, as Bitcoin is clearly highly correlated with the stock market during this scary market,” said Bendik Norheim Schei, Head of Research at Arcane Research. Decrypt By email.

The relationship with Nasdaq is at an all-time high, and Investors They put bitcoin in the same basket of risky tech stocks,” Schei added.

So how can investors determine where the price of bitcoin may be headed in the coming weeks and months?

“The stock market is the leading indicator of bitcoin at the moment,” Schei said. “Present 30 thousand dollars He said the level being tested this week was a fairly strong support level in 2021 and is currently holding, but I wouldn’t put my money into it if the stock market continues to fall.

GlobalData chief analyst Lil Read shared a similar view, but also argued that cryptocurrencies do not currently serve as an inflation hedge.

“Many crypto investors see the fact that they are not tied to the value of traditional assets, such as gold, stock in a company, or fiat currencies, as being central to crypto’s attraction and value proposition,” Reid said. Decrypt By email. “Some cryptocurrency speculators have even looked at cryptocurrencies as an inflation hedge, but that clearly hasn’t worked – the fact is that at least the past few weeks have seen cryptocurrencies follow the trends of the broader market.”

Reid cited the US Federal Reserve’s recent decision to raise interest rates as the main driver for downtown, adding that “in an environment of higher interest rates, investors generally become more risk averse.” In Reid’s view, “the pricing dynamics of cryptocurrencies are likely to mirror broader market trends until we see a new level of stability — which could take a few months or even years.”

Not giving an opinion

The opinions and opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.

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