Bitcoin’s price has been trading in a range for quite a while now, between the important levels of $18,000 and $24,000. The past couple of days saw a newfound bullish momentum where BTC managed to close its highest daily candle in about 24 days.
Now, Yassine Elmandgra, a cryptocurrency analyst at ARK Invest, together with the co-founder of Reflexivity Research, Will Clemente, outline a few possible reasons why the bottom might already be in.
Strong Holder Behavior
It appears that the short-term holder cost basis of Bitcoin has crossed below its long-term holder cost basis. This has only happened three times before, and according to the analysts, “this cross historically marks a cyclical bottom.”
Despite the cryptocurrency trading between its investor cost basis at approximately $19,000 and the 200 weekly moving average at $23,500, the above demonstrates a strong holder behavior that’s battling the weak macro environment. According to Elmandgra, a “resolution to either side will play a significant role in bitcoin’s short- to mid-term outlook.”
The analyst also believes that miner capitulation is leaning towards completion.
The 30-day moving average of hashrate has officially crossed above its 60-day moving average, exiting a major completion period.”
It’s worth noting, however, that a recent report by the popular cryptocurrency analytics resource, Glassnode, indicated that the current price of BTC is getting dangerously close to its cost of production, which sits at roughly $18,300 (at the time of the report). The company concluded that this could spell trouble for miners and “signals a potential threshold for acute income stress in the mining industry.”
The above is also supported by the ARK Invest report itself, which noted a 55.7% decrease in the 1-year BTC miner’s revenue.
Long-Term Supply at All-Time High
Another important metric that the analyst brought up is the long-term holder supply. It reached an all-time high at 13.7 million BTC, representing 71.5% of the outstanding supply of the cryptocurrency. This, paired with the fact that quarterly coin days destroyed have reached a 12-year low, is a very positive sign.
Another thing to consider is the fact that the BTC supply on exchanges is the lowest since November 2018. As CryptoPotato reported yesterday, exchange outflows are mounting as investors demonstrate long-terms in the asset.
All of the above is to be taken into consideration in conjunction with the overall macroeconomic uncertainty. The analysts also pointed out that:
As signs of a recession are becoming clearer, the dollar seems to have entered a parabolic rise, negatively impacting all risk-on assets including Bitcoin.
A strong dollar is sending major euro banks into turmoil. CDS spreads on Deutsche Bank and Credit Suisse have reached levels not seen since the ’08 financial crisis.
This is also part of the reasons for which foreign pressure on the US to stop hiking interest rates is escalating. The UN even expressed worries that if the Federal Reserve keeps the rates, this could cause a global recession.
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