Bitcoin Price

Traders think Bitcoin bottomed, but on-chain metrics point to one more capitulation event

BTC price gravitates around the low $30,000 zone, luring traders to believe the bottom is in, but data from Glassnode warns of another final sell-off.

The bull market euphoria that carried prices to new highs throughout 2021 has given way to bear market doldrums for any Bitcoin (BTC) buyer who made a purchase since Jan. 1, 2021. Data from Glassnode shows these buyers “are now underwater” and the market is gearing up for a final capitulation event.

Bitcoin net unrealized profit/loss. Source: Glassnode

As seen in the graphic above, the NUPL, a metric tha is a measure of the overall unrealized profit and loss of the network as a proportion of the market cap, indicates that “less than 25% of the market cap is held in profit,” which “resembles a market structure equivalent to pre-capitulation phases in previous bear markets.”

Based on previous capitulation events, if a similar move were to occur at the current levels, the price of Bitcoin could drop into a price range of $20,560 to $25,700 in a “full-scale capitulation scenario.”

The market is in search of the bottom

With the crypto market clearly trading in bear market territory, the question on everyone’s mind is “where is the bottom?”

One metric that can help provide some possible guidance is the Mayer Multiple, an oscillator that tracks the ratio between price and the 200-day moving average.

*Mayer Multiple model for Bitcoin. Source: Glassnode*

In previous bear markets, “oversold or undervalued conditions have coincided with the Mayer Multiple falling in the range of 0.6–0.8,” according to Glassnode and that is precisely the range where Bitcoin now finds itself.

Based on the price action from previous bear markets, the recent trading range of Bitcoin between $25,200 and $33,700 lines up with the B phase of the previous bear market cycles and could mark the low of BTC in the current cycle.

The Bitcoin realized price model also offers insight into what a potential price bottom for Bitcoin could be, with the current reading provided by the Bitcoin data provider LookIntoBitcoin suggesting the realized price for BTC is $23,601 as of June 5.

*Bitcoin realized price. Source: LookIntoBitcoin*

Combining these two metrics suggests that the low for BTC could occur in the $23,600 to $25,200 range.

Short term holder and miner capitulation

Selling in the current market conditions has largely been dominated by short-term hodlers, similar to the behavior that was seen during the two previous extended bear markets where long-term holders held more than 90% of the profit in the market.

*Long-term Bitcoin holders share from supply in profit. Source: Glassnode*

The recent drop below $30,000 for Bitcoin saw the percentage of supply in profit spike above 90% for the long-term holder cohort, suggesting short-term holders have “essentially reached a near-peak pain threshold.”

According to Glassnode, miners have also been net sellers in recent months as the decline in BTC has hampered the profitability for miners resulting in “an aggregate miner balance reduction of between 5K and 8K BTC per month.”

*Bitcoin miner net position change. Source: Glassnode*

Should the price of BTC continue to decline from here, the potential for an increase in miner capitulation is not out of the question, as demonstrated in the past by the Puell Multiple, which is the ratio of the daily issuance value of bitcoin to the 365-day moving average of this value.

*Puell multiple vs. BTC price. Source: LookIntoBitcoin*

Historical data shows that the metric has declined into the sub-0.5 zone during the late stages of previous bear markets, which has yet to occur during the current cycle. Based on the current market conditions, a BTC price decline of an additional 10% could lead to a final miner capitulation event that would resemble the price decline and selling seen at the hight of previous bear markets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

5 reasons why Bitcoin could be a better long-term investment than gold

Crypto advocates often refer to Bitcoin as “digital gold,” but how does BTC stack up against gold as a long-term investment?

The emergence of forty-year high inflation readings and the increasingly dire-looking global economy has prompted many financial analysts to recommend investing in gold to protect against volatility and a possible decline in the value of the United States dollar.

For years, crypto traders have referred to Bitcoin (BTC) as “digital gold,” but is it actually a better investment than gold? Let’s take a look at some of the conventional arguments investors cite when praising gold as an investment and why Bitcoin might be an even better long-term option.

Value retention

One of the most common reasons to buy both gold and Bitcoin is that they have a history of holding their value through times of economic uncertainty.

This fact has been well documented, and there’s no denying that gold has offered some of the best wealth protection historically, but it doesn’t always maintain value. The chart below shows that gold traders have also been subject to long bouts of price declines.

For example, a person who bought gold in September of 2011 would have had to wait until July 2020 to get back in the green, and if they continued to hold, they would once again be near even or underwater.

In the history of Bitcoin, it has never taken more than three to four years for its price to regain and surpass its all-time high, suggesting that on a long-term timeline, BTC could be a better store of value.

Could Bitcoin be a better inflation hedge?

Gold has historically been seen as a good hedge against inflation because its price tended to rise alongside increases in the cost of living.

But, a closer look at the chart for gold compared with Bitcoin shows that while gold has seen a modest gain of 21.84% over the past two years, the price of Bitcoin has increased 311%.

*Gold vs. BTC/USDT 1-day chart. Source: TradingView*

In a world where the overall cost of living is rising faster than most people can handle, holding an asset that can outpace the rising inflation actually helps increase wealth rather than maintain it.

While the volatility and price declines in 2022 have been painful, Bitcoin has still provided significantly more upside to investors with a multi-year time horizon.

Bitcoin could mirror gold during geopolitical uncertainty

Often called the “crisis commodity,” gold is well-known to hold its value during times of geopolitical uncertainty as people have been known to invest in gold when world tensions rise.

Gold is called the crisis metal so I’d assume if we enter into a recession again, gold will go up as a commodity

— Scott Hempstead (@scottytrip1) April 22, 2022

Unfortunately for people located in conflict zones or other areas subject to instability, carrying valuable objects is a risky proposition, with people being subject to asset seizures and theft.

Bitcoin offers a more secure option for people in this situation because they can memorize a seed phrase and travel without fear of losing their funds. Once they reach their destination, they can reconstitute their wallet and have access to their wealth.

The digital nature of Bitcoin and the availability of multiple decentralized marketplaces and peer-to-peer exchanges like LocalBitcoins provides a greater opportunity to acquire Bitcoin.

The dollar keeps losing value

The U.S. dollar has been strong in recent months, but that is not always the case. During periods where the dollar’s value falls against other currencies, investors have been known to flock to gold and Bitcoin.

If various countries continue to move away from being U.S. dollar centric in favor of a more multipolar approach, there could be a significant amount of flight out of the dollar but those funds won’t go into weaker currencies.

While gold has been the go-to asset for millennia, it’s not widely used or accepted in our modern digital society and most people in younger generations have never even seen a gold coin in person.

For these cohorts, Bitcoin represents a more familiar option that can integrate into people’s digitally-infused lifestyles, and it doesn’t require extra security or physical storage.

Bitcoin is scare and deflationary

Many investors and financial experts point to scarcity and supply constraints for gold following years of declining production as a reason gold is a good investment.

It can take five to ten years for a new mine to reach production, meaning rapid increases in supply are unlikely and central banks significantly slowed their rate of selling gold in 2008.

That being said, it is estimated that there is still more than 50,000 metric tons of gold in the ground, which miners would happily focus on extracting in the event of a significant price increase.

Gold will never reach the promised land of ‘true scarcity’. The more the price inches up, the more it is mined, thus increasing supply, which then lowers the price. #bitcoin #gold #goldprice

— DeepSee-er (@ErDeepsee) March 7, 2022

On the other hand, Bitcoin has a fixed supply of 21 million BTC that will ever be produced, and its issuance is happening at a known rate. The public nature of the Bitcoin blockchain allows for the location of every Bitcoin to be known and verified.

There’s no way to ever really locate and validate all of the gold stores on this planet, meaning its true supply will never really be known. Because of this, Bitcoin wins the scarcity debate, hands down, and it is the hardest form of money created by humankind to date.

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Bitcoin bond still on hold, El Salvador accused of human rights violations

El Salvador’s finance minister believes the ongoing price volatility of Bitcoin means the awaited “Bitcoin bond” won’t be launched anytime soon. Meanwhile, the country faces a “human rights crisis.”

El Salvador’s Finance Minister Alejandro Zelaya has said the country will further delay launching its anticipated billion-dollar Bitcoin (BTC) bond, citing price volatility and uncertain market conditions resulting from the ongoing Russia-Ukrainian war.

The news comes at the same time that Amnesty International accused the Salvadoran authorities of “flagrant violations of human rights and criminalizing people living in poverty.”

In a Wednesday interview on the local “Frente a Frente” (Face-to-Face) news program, Zelaya was asked if the situation with the $1 billion Bitcoin bond issuance from a “few months ago” had changed.

“No, not yet, the [Bitcoin] price continues to be disrupted by the war in Ukraine,” he said according to a rough translation. He added that “in the short term the variations are constant but in the long term it always tends to appreciate in value:”

“There is a future and there is an economic innovation [in Bitcoin] that we must bet on.”

The plan for the bond was originally announced in November 2021 by El Salvador’s president Nayib Bukele. Half of the $1 billion expected is to fund the construction of a Bitcoin City built near a volcano, with the idea that its geothermal energy could be harnessed for Bitcoin miners. The other half of the funds raised would be invested into Bitcoin.

The $1 billion bond was originally scheduled to launch in mid-March 2022 but in an interview in March, Zelaya delayed the launch, citing price volatility, giving a possible launch date around June with a timeline extending until September 2022.

Mounting fears that the country could default on an $800 million bond due in January 2023 caused rating agency Moody’s to downgrade El Salvador’s credit rating on May 4, citing a “lack of a credible financing plan.”

El Salvador’s government has been buying Bitcoin since September 2021, with Bukele announcing that the country purchased a further 500 BTC on May 9. El Salvador is estimated to have lost more than $35.6 million from its BTC investments so far.

Amnesty International: “Human rights crisis”

Meanwhile, human rights advocacy nonprofit Amnesty International accused El Salvador’s government of committing “massive human rights violations” through arbitrary arrests, ill-treatment and torture of prisoners.

A state of emergency (SOE) was declared by President Bukele on March 27 due to a rising homicide rate, which the government blamed on gangs and organized crime. The SOE has since been extended twice.

The human rights group said the SOE changed laws and legal procedures which undermine the rights to defense, the presumption of innocence, effective judicial remedy and access to an independent judge.

During the crackdown, more than 35,000 people have been imprisoned in less than three months, with the increase in arrests causing 1.7% of the country’s population over 18 years old to be in detention, resulting in overcrowding of over 250% of the prison capacity.

0 homicidios.#Seguimos https://t.co/Dzcs18bjpA

— Nayib Bukele (@nayibbukele) June 2, 2022

But, despite the abuses, many El Salvadorians agree with Bukele’s harsh measures, as the president remains popular in opinion polls. The most recent poll released by local media on Wednesday shows a near 87% approval rate for the current president.

3 key indicators traders use to determine when altcoin season begins

Clever traders frequently use these three indicators to pinpoint when an altcoin season could begin.

It’s widely accepted that the fate of the cryptocurrency market depends largely on the performance of Bitcoin (BTC), which makes times like these for crypto traders who prefer to invest in altcoins.

When BTC price is down, altcoins tend to follow, but as a bottoming process begins, altcoins tend to perk up during Bitcoin’s consolidation phases and this typically leads to a call for an altcoin season. While Bitcoin’s current dip below $30,000 shows that it’s a bit premature to call for an altseason, analysts are still charting a variety of different outcomes that point to an altcoin season. Let’s have a look.

ETH/BTC price action could be an early indicator

Insight into the possibility of an altcoin season using the ETH/BTC chart as an indicator was discussed by analyst and pseudonymous Twitter user PlanDeFi, who posted the following chart comparing the 2016 to 2017 performance of ETH/BTC against the pair’s performance in 2021–2022.

*ETH/BTC in 2016/2017 vs. ETH/BTC in 2021/2022. Source: Twitter*

PlanDeFi said,

“Looks damn similar, right? Accumulation>Breakout>Ascending Channel>Breakout. The market is bigger now — it just takes longer.”

Based on the projection provided, the next altseason could kick off sometime after the start of July and it has the potential to extend through the end of 2022.

A 2017 fractal suggests an altseason is imminent

Further evidence that the market may be approaching an inflection point was provided by El_Crypto_Prof, who posted the following chart looking at the history of the altcoin market capitalization.

El_Crypto_Prof said,

“When it comes to altcoins, I can see the following scenario playing out. There are just too many similarities with the previous cycle. RSI also looks incredible. The next wave up will leave many behind.”

The market is firmly in “Bitcoin Season”

While fractals are pleasing to the eye and give hope to disillusioned traders, most fail to materialize and they are not accurate analysis methods to rely on when trading.

The Altseason Indicator provides a more metrics-based method for predicting when the market is in “Bitcoin season” and “altcoin season.”

*Altseason indicator. Source: Blockchain Center*

According to the chart above, it does not appear as though an altseason is likely to happen anytime soon because the metric is currently providing a readout of 24, while the level needed to signify an altseason is 75.

Based on the past performance of the index, it has taken a minimum of two to three months for it to climb from the area indicating that it is Bitcoin season to the altcoin season level. Current projections, according the the indicator, suggest that an altcoin season might not start until August or September 2022.

Major crypto firms reportedly cut up to 10% of staff amid bear market

Previous crypto bear markets triggered much bigger layoffs, with some firms like ConsenSys reportedly firing up to 60% of its workforce in 2018.

Gemini, a cryptocurrency trading platform founded by brothers Cameron and Tyler Winklevoss, is the latest industry firm to lay off a significant part of its staff due to unfavorable market conditions.

Winklevoss’ crypto business Gemini Trust reportedly cut 10% of its employees amid the ongoing bear crypto market, the founders wrote in a notice to employees on June 2, as Bloomberg reported.

As part of its first major headcount cut, Gemini will refocus on products that are “critical” to the firm’s mission, the brothers said, adding that “turbulent market conditions” are “likely to persist for some time.” The notice reportedly reads:

“This is where we are now, in the contraction phase that is settling into a period of stasis — what our industry refers to as “crypto winter. […] This has all been further compounded by the current macroeconomic and geopolitical turmoil. We are not alone.”

The new report comes after a number of major industry companies fired some employees or put new hires on hold. In mid-May, the Coinbase exchange officially announced that it would slow down hiring and reassess its headcount in order to ensure it continues operating as planned.

Previously, the major crypto-friendly trading platform Robinhood fired 9% of its workforce. The layoffs came amid Robinhood’s HOOD stock touching all-time lows as part of a longer-term bear market on crypto markets.

The latest crypto industry layoffs are by no means new to the industry as major crypto markets like Bitcoin (BTC) have been historically moving in cycles, with major bear markets preceding bigger gains. Amid a massive bear market of crypto in 2018, some industry firms like ConsenSys reportedly fired up to 60% of their workforce, announcing plans to hire 600 employees afterward.

According to some sources, the current conditions of the crypto job market do not look too gloomy though. A spokesperson for the FTX crypto exchange told Cointelegraph that the firm has not cut and does not plan to lay off any of its current 175 employees at the global exchange or 75 employees at the FTX US.

According to the crypto hiring website by the Bitcoin influencer Anthony Pompliano, executives in the crypto and blockchain industry are still looking to hire people, with the PompCryptoJobs website listing about 600 open positions at the time of writing. The major global crypto exchange Binance is looking to hire nearly 1,000 employees, according to its official job openings website.

Gemini did not immediately respond to Cointelegraph’s request for comment.

Here are 3 altcoins that could surge once Bitcoin flips $35K to support

ADA, MATIC and XLM appear well positioned for a bullish breakout once BTC flips the $32,000 to $35,000 zone to support.

Bitcoin (BTC) and the wider cryptocurrency market are taking a breather after the rally on May 31. Meanwhile, most altcoins remain severely oversold, with most between 70% and 90% below their all-time highs.

What is clear is that fear is everywhere and blood is in the water. Risk-on markets are suffering worldwide, but it is exactly these kinds of conditions that create opportunities where professional money accumulates and adds to positions.

Let’s take a look at three altcoins that could be positioned for a rebound if the broader market enters a new uptrend.

ADA could be setting up for an 80% surge

Cardano (ADA) has a significantly bullish update coming very soon. The much anticipated Vasil hard fork, which increases performance and adds more Plutus enhancements, is planned for June.

From a price action perspective, ADA is positioned in a strong price range that will likely support any further upside that the broader market experienced. Within the Ichimoku Kinko Hyo system, ADA has maintained a significant gap between the bodies of the past three weekly candlesticks and the Tenkan-Sen.

When the bodies of the candlesticks and the Tenkan-Sen have noticeable gaps, a correction often occurs within three to four days. This is because the equilibrium is out of sync, the Tenkan-Sen and price action like to stick together as much as possible. A mean reversion back to the Tenkan-sen is extremely likely when one strays too far from the other.

ADA/USD weekly Ichimoku Kinko Hyo chart Source: TradingView

However, if the broader cryptocurrency market experiences a big bounce, ADA price may shoot past the Tenkan-Sen to test the Kijun-Sen. ADA has not tested the weekly Kijun-Sen since the week of November 8, 2021.

The weekly Kijun-Sen is at $1.02 and contains the 2021 volume point of control and the 50% Fibonacci retracement of the all-time high to the low of January 25, 2021.

ADA/USD weekly chart (Binance) Source: TradingView

MATIC aims for $1

Looking at the weekly chart of Polygon (MATIC), one can’t help but notice that it looks strikingly similar to ADA. MATIC and ADA both have sold off from $3 and both are stuck in the mid $0.50 to mid $0.60 price range, but that is where the similarities mostly end.

Fundamentally, MATIC remains strong. Governments worldwide have attempted to restrict or ban mining due to excessive energy costs for proof-of-work blockchains and MATIC is likely to avoid government scrutiny and attract supporters as a positive example of environmental stewardship.

Like ADA, MATIC has significant gaps between the bodies of its weekly candlesticks and the Tenkan-Sen. Although, MATIC’s gaps are more significant. Likewise, the gap between price and the Kijun-Sen is much more meaningful.

Within the Ichimoku Kinko Hyo system, there is a max-mean that price will travel away from the Kijun-Sen before experiencing a violent mean reversion. For MATIC, that threshold is 63%.

MATIC/USD weekly chart (Binance) Source: TradingView

Any renewed bullish momentum ifor Bitcoin will likely see MATIC lead the altcoins higher until it reaches the $1.00 to $1.15 value area near the weekly Tenkan-Sen.

XLM lags the altcoin market, but it’s known for surprises

Sometimes it is hard to forget that during the last major bull run from the COVID crash to November 2021, there were a few major altcoins that did not hit new all-time highs. Stellar (XLM) is one. In fact, the last time XLM made a new all-time high was the week of January 8, 2018, almost four and a half years ago!

One thing that XLM has going for it that not many other weekly charts have is a very clear falling wedge pattern. Out of the standard rectangle and triangle patterns in technical analysis, wedge patterns are the most powerful. What makes its wedge so powerful is the probable fakeout breakout lower.

XLM/USD weekly chart (Binance) Source: TradingView

The most probable direction for a falling wedge is higher — but breakouts below a falling wedge can yield powerful short opportunities. The typical behavior that analysts and traders expect to see with a failed falling wedge is an immediate and swift sell-off, but so far, bears have been unable or unwilling to do so.

Instead, the weekly chart for XLM shows a very strong probability of a fakeout. If bullish momentum returns to the cryptocurrency market, XLM is likely to hit the second peak of the falling wedge near the $0.38 value area.

Classic technical analysts believe that technicals lead fundamentals. If that is true, then altcoins like XLM, MATIC, and ADA could be positioned in very desirable conditions in the event of any new bull run.

However, downside risks remain a concern, but they are likely extremely limited. If a new uptrend fails to materialize before the end of June, the cryptocurrency market will probably move sideways until a major breakout higher or lower occurs in the Fall.