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Bitcoin Peak Pre-Halving Doesn’t Guarantee Further Gains: Analyst

With the fourth Bitcoin Halving just around the corner, Lady of Crypto, a market analyst and trader, has weighed in on claims concerning this bull cycle. 

The crypto analyst shared her insights after analyzing the recent market decline and the impending Bitcoin halving this month. According to the expert, there have been speculations that since BTC broke its all-time high early, the cryptocurrency can continue seeing fresh gains. 

Bullish Run Misconception: Bitcoin Can Hit Another ATH?

Lady of Crypto has disregarded the claims that this bull cycle will begin early, saying she believed the community was “lied to and suggesting widespread misinformation” and dismissing the current gains as the signs of a widespread bull run.

As The Halving approaches, the analyst noted that Bitcoin and Altcoins are severely down, but this is not the time to panic. Drawing attention to the 2016 and 2020 pre-halving dips, she highlights that BTC plummeted by 30% and 20% shortly before the event.

Meanwhile, during this pre-halving period, BTC has dropped by over 17%, with altcoins falling by 29%. Although the current decline was severe, Lady of Crypto notes that it is in the range of a typical pre-halving dip and a black swan event.

She compares the COVID meltdown, in which BTC fell by 58% and altcoins by 68%, suggesting that the current decline pales in significance.

Lady of Crypto clarified that Bitcoin Spot Exchange-Traded Funds (ETFs) have been a major factor in BTC breaking its peak early, highlighting that the masses have not yet arrived. 

The expert then points to social media presence, revealing that the masses are returning to the crypto market. “YouTube views and subscribers show interest in returning gradually, in line with this time last cycle, as do new Twitter followers,” she added.

This Bull Cycle Is Mirroring Past Halving

Except for BTC’s early all-time high break, Lady of Crypto believes this bull run is unfolding similarly to the last two, albeit with more volatility. However, the volatility suggests this will be the biggest bull market ever. 

She advises underexposed investors that the dips are the best chance to purchase BTC during a bull run. Meanwhile, if an investor is overexposed, holding the crypto asset has historically been the best course of action, drawing attention to 2020 and 2021 dips.

Addressing fear and panic among investors, Lady of Crypto cautioned that multiple situations might trigger a panic sell during every bull run. Even though these events appear terrible, like the bull run coming to an end, they are just sideshows.

Bitcoin

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Bitcoin Supply In Loss Now At Similar Levels To COVID Crash And 2018 Bottom

On-chain data shows the amount of Bitcoin supply in loss has now reached levels similar to during the COVID crash and the 2018 bear market bottom.

Bitcoin Supply In Loss Spikes Up Following The Latest Crash

As pointed out by an analyst in a CryptoQuant post, the BTC supply in loss has set a new record for this year following the FTX disaster.

The “supply in loss” is an indicator that measures the total amount of Bitcoin that’s currently being held at some loss.

This metric works by looking at the on-chain history of each coin in the circulating supply to see what price it was last moved at.

If this previous price for any coin was more than the current BTC value, then that particular coin is in some unrealized loss right now, and the indicator accounts for it.

Now, here is a chart that shows the trend in the 7-day moving average Bitcoin supply in loss over the history of the crypto:

Bitcoin Supply In Loss

The 7-day MA value of the metric seems to have been pretty high in recent days | Source: CryptoQuant

As you can see in the above graph, the Bitcoin supply in loss has sharply risen up over the last couple of days as the price of the crypto has observed a deep crash.

The current loss value is a new record for the 2022 bear market, and is also in fact the highest the indicator has been since the COVID black swan event back in 2020.

Notably, the amount of underwater supply in the market was also at similar levels back in late 2018, when the bear market of that cycle set its bottom.

If the same trend as in those previous bottoms follows now as well, then the latest high loss values may imply the market has now declined deep enough for a bottom.

However, even if the pattern does follow, it doesn’t mean pain might be over for the investors. As is apparent from the chart, in the 2018-19 bear the market moved mostly sideways after the bottom, and also formed another peak of similar loss values, before some bullish wind returned to Bitcoin.

BTC Price

At the time of writing, Bitcoin’s price floats around $16.4k, down 18% in the last week. Over the past month, the crypto has lost 15% in value.

The below chart shows the trend in the price of the coin over the last five days.

Bitcoin Price Chart

Looks like the value of the crypto has recovered a bit since the crash below $16k | Source: BTCUSD on TradingView
Featured image from Jonathan Borba on Unsplash.com, charts from TradingView.com, CryptoQuant.com

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The Bear Market Correction Could Be Over, According To ARK. Reasoning Inside

Rejoice! The bear market might be over. That’s the main thesis behind July’s “The Bitcoin Monthly” report. “Because bitcoin’s price did not rise parabolically during the 2021 bull market, its bear market correction could be over,” ARK reasons. And it makes sense, the numbers seem to suggest it, and it feels like it. However, are we fooling ourselves? Is ARK’s reasoning wishful thinking? Let’s examine the data and see what it tells us.

First of all, “bitcoin closed the month of July up 16.6%, rising from $19,965 to $23,325, its most significant gain since October 2021.” So far, so good. Can we declare that the bear market correction is over, though? Well, “the likelihood of touching its delta cost basis has diminished, bitcoin’s downside risk in a bear market technically stands at its delta cost basis, currently $13,890.” This number seems far away. Maybe bitcoin is slowly getting out of its slum. 

“Bitcoin has corrected 72% relative to its alltime high. Although this drawdown is consistent with intracyclical corrections, like the COVID collapse in 2020, bitcoin usually finds global cyclical bottoms with a correction greater than 80%.”

That doesn’t sound as promising. Maybe there’s more pain ahead, however… “Given the positive correlation between bitcoin and US equities since COVID, the US being the leading price mover of bitcoin suggests an emerging risk-on market environment,” ARK claims. Apparently, the US has been leading the bulls lately. Perfect. Bitcoin needs all the help it can get in these trying times.

Are We Leaving The Bear Market? Let’s Look At The Signs

  • “Contagion in the crypto markets appears to be contained, as Celsius and Three Arrows Capital officially file for bankruptcy.”

Announcing the Celsius news, NewsBTC said “After weeks of conjecture and hearsay, Celsius’s legal counsels have formally informed regulators that the cryptocurrency lender has filed for Chapter 11 bankruptcy protection.” Announcing the 3AC one, we said, “Crypto hedge fund 3 Arrows Capital is slated to be another pillar piece of 2022’s bear market headlines, joining the likes of brutal bear market moments that include Terra Luna’s downfall and CeFi’s drama.”

  • “Leverage appears to be unwinding across the crypto ecosystem, paving a path to recovery”

That’s phenomenal. May this continue to happen.

  • “After trading below its investor cost basis for the first time since March 2020, bitcoin has reclaimed major support levels and is trading above its market cost basis.”

Great news. Is this real, then? Are we getting out of the bear market this fast?

BTC price chart for 08/09/2022 on Kraken | Source: BTC/USD on TradingView.com
Other Factors, Miners And Lightning

  • “Despite continued miner pressure, bitcoin’s economics are at equilibrium.”

Ok, some miners sold and others turned down their machines. However, the pressure seems to be subsiding and the sun seems to be shining. 

  • “Bitcoin’s scaling solutions appear to be gaining momentum, as capacity on the Lightning Network reaches an all-time high.”

The Lightning Network went head to head with the bear market and didn’t even flinch. People are building and the L2 solution is bigger and better than ever. “LN capacity growth seems to accelerate during bear markets, marking a shift in sentiment from exuberance and speculation to testing and building longterm solutions for bitcoin.”

  • “Given continued declines in economic activity, including employment, the Federal Reserve could pivot during the second half of the year.”

Is the US in the middle of a recession? Opinions vary, but the results are the same. People all over the world are struggling. “The drop was attributable largely to a decrease in inventories, residential and non-residential investments, and government spending. Strong recession signals could compel the Fed to change its hawkish stance,” ARK states. 

  • “The 10-year Treasury bond yield has been unable to sustain a move above 3% and is now falling, posing less competition to cryptoassets.”

Government bonds were the safest investment for years and years. Nowadays, they’re not the new kid on the block anymore. Bitcoin is the new kid on the block. This bear market might not have been more than “brief deviation.” We might be back in business after all.

Featured Image by Alexa from Pixabay | Charts by TradingView