The Bitcoin price has again fallen below the $ 20,000 mark, while the current capitulation of market participants continues. The bottom of the current crypto bear market may not form until months later.
The Bitcoin price fell again below the crucial support area at $ 20,000 after a rally at the weekend. So, apparently, there are not enough buyers yet to put pressure on the psychological brand. Even some long-term holders sold their Bitcoin.
According to Glassnode’s weekly on-chain report, the capitulation of market participants continues, as there are currently many financial stress factors on the market. The authors wrote that the duration and downside risk of the current crypto bear market could increase further before a solid bottom really develops.
The analyst who conducted the research for the report stated that “Bitcoin investors are not off the hook yet”.
When will the Bitcoin price hit the bottom?
It is very difficult, even for professional traders, to accurately predict the bottom of a market. If you open a buy or long position near the bottom, then this is usually already quite a big success. Currently, the Bitcoin price is more than 71% away from the last all-time high.
Glassnode analysts explained that Bitcoin miners were still selling BTC for the past few months. In the last Bitcoin bear market, the miner capitulation lasted about 4 months. So it could be that the sale of the miners will continue into the third quarter of 2022.
The analysts also wrote that the downtrend continued for about 15 months during the bear market of 2018/2019 and the Bitcoin price fell about 84% below the peak of the cycle. If history repeats itself, the bottom could form between $12,000 and $13,000 by the first quarter of 2023. The report states that:
“One of the main results of a long bear market is the redistribution of wealth among the remaining players.”
A prolonged period of financial pain leads to a decrease in demand and creates the conditions for the “ultimate surrender” and the stage of finding the ground, the conclusion says.
Bitcoin Bear Market: A Picture of BeInCrypto.com
Catalysts for surrender
Further negative news about the macroeconomic conditions could trigger further large sell-off waves on the crypto market and lead to a final “flush-out”.
On July 13, 2022, the Consumer Price Index (CPI) and other inflation figures will be published by the Bureau of Labor Statistics. The data is expected to be worse than that of May. At that time, the CPI was around 8.7%.
In addition, the Federal Reserve could carry out further rate hikes at the end of the month. This makes risky assets such as Bitcoin or other cryptocurrencies even more unattractive, at least in the short term.
Economist Lyn Alden believes that the Fed will not be able to further tighten monetary policy until 2023. Inflation could continue to accelerate until the FED gets it under control. Therefore, the rest of 2022 could be painful for the crypto markets, but bottoming out may be in sight soon. We could see a new price discovery phase and a crypto spring in 2023.