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(qlmbusinessnews.com Fri, 8th Sept, 2023) London, UK —
Bitcoin's recent price performance may be underwhelming, but various indicators suggest the possibility of a rare buying opportunity for long-term investors.
Bitcoin's price trajectory appears precarious, with a recent report from Ark Invest indicating that short-term Bitcoin investors were compelled to capitulate in August as the percentage of Bitcoin supply in profit dropped by 14 percentage points.
While many traders view significant price declines as buying opportunities, the current phase of the Bitcoin halving cycle has witnessed a notable bearish development: Bitcoin's price falling below its 200-week moving average (MA) for the first time since June 2023.
Charts show that the 200-week MA generally serves as a critical support level during major downtrends. Ark suggests that any potential future bearish catalysts could drive Bitcoin's price down to around $20,300, where its current realized price resides.
Despite the less-than-rosy short-term outlook for the cryptocurrency market, a more optimistic perspective on Bitcoin's dip below the 200-week MA highlights that declines beneath both the realized price and long-term moving averages have historically presented cyclical buying opportunities. Investors who accumulated Bitcoin when its price fell below both metrics in 2019, 2020, and early 2022 found themselves in significant profit within the following six months.
A Crypto Analyst recently hinted at a similar trend in the Bitcoin dominance metric, suggesting that “Bitcoin's about to take the driver's seat again.”
“In terms of price action, right now I see a lot of similarities to what took place in 2019. And it has me anticipating a trend to unfold regarding Bitcoin over the next few weeks and possibly months. It has to do with Bitcoin dominance (BTC.D), a measure of Bitcoin's market share of crypto based on its market cap. Charts show, that that rally in 2019 started back in 2018, when we got a nice double bottom, followed by a solid run up until Q1 2019. Then, we trended down for a few months before getting the massive reversal on April Fools' Day.”
Comparing market sentiment from 2018-2019 to the present, The Crypto Analyst suggests that the current price action resembles the pre-reversal period in 2019 when “we were in a winter, everybody had low energy, and nobody cared about Bitcoin or crypto.”
Stablecoin market cap data also mirrors the absence of bullish investor sentiment. Ark notes that the “90-day supply of aggregate stablecoins has dropped more than 20% from $162 billion in March 2022 to 120 billion today.” This reflects declining market liquidity and reduced confidence among investors in engaging with Bitcoin and altcoins.
Clearly, the prospect of spot Bitcoin exchange-traded funds (ETFs) remains a significant consideration for both retail and institutional investors. Until one receives approval or the narrative of the upcoming Bitcoin halving takes precedence over the “ETF approval triggering a bull market” narrative, these market dynamics are likely to persist.
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