How Low Will Bitcoin Go? 16-Month Range Bottom May Provide Clues

Bitcoin

The crypto markets were sent reeling on Monday after a sharp sell-off in Bitcoin (BTC), the flagship cryptocurrency, which suffered a more than 10% drop intraday to fall as low as $30,516.

The losses extended the bleeding from last week, when the markets had already been roiled by a sell-off in global equities amid concerns about the impact of rising interest rates on asset prices.

The Fed’s decision to hike rates by 50 basis points last week was seen as adding to the headwinds for the markets, particularly given that it came along with the central bank’s quantitative tightening program.

Monday’s sell-off in cryptos appears to have been triggered by weakness in traditional markets, with Bitcoin falling sharply after US stocks extended their longest weekly losing streak in a decade.

The weak start to the week for risk assets is likely to add to the nervousness in financial markets and could lead to further selling pressure in the days ahead. In fact, crypto-analysis platform Glassnode says there’s potential for more downside “when compared to the ultimate lows of [2015 and 2018] Bitcoin bear markets.”

Despite the sharp sell-off, Marcus Sotiriou, an analyst with London-based digital asset trading platform GlobalBlock wrote in a Monday note to clients that BTC is near the bottom of a 16-month range.

Technically, Bitcoin’s structure is bearish as lower-lows and lower-highs persist, but Bitcoin is now approaching the bottom of the 16-month range. The region near the low of the range, from $28-32k, could be a good region to add to long term holdings from a risk-reward perspective.

Another positive signal, according to Sotiriou, is the recent increase in the number of bitcoin hodlers suggesting that a price bounce may be forthcoming.

There are a few reasons why this may be the case. Firstly, when there is an increase in hodling, it generally means that investors believe that the price of the asset will eventually go up. This increased confidence can lead to more buying pressure and push the price higher in the short-term.

Secondly, when there is an increase in hodling, it often means that there is less selling pressure as investors are more reluctant to sell their assets. This can also lead to a short-term price increase.

Overall, the recent increase in Bitcoin hodlers is a positive development and suggests that a price increase may be on the horizon.

In his view on hodler activity, Sotiriou seems to agree with this assessment given that Bitcoin that has not moved in the past year is at its all-time high.

“On-chain metrics remain incredibly bullish, as the percentage of Bitcoin which has not moved in a year is now at an all-time high,” the analyst said, adding that this “shows that the proportion of Bitcoin holders who are long-term hodlers is increasing, which is positive.”

Price Action

BTC traded in a range of $30,516.07 – $34,295.77, indicating significant volatility over the last 24 hours.

At last check, the $590 billion market cap apex cryptocurrency was changing hands at $30.955, accelerating its weekly decline to about 28%.

h/t kitco

Disclaimer: This article is provided for informational purposes only. It is not intended to be used as investment or financial advice

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