Since the price of Bitcoin hit a historic high of $64,840 on April 14, it has since turned down. The current price has fallen to $32,000, a drop of more than 50%. The total market value of Bitcoin also fell from $1.18 trillion to $610 billion. Is the bull market over? Is it a bear market now? Recently, there have been controversies about bulls and bears one after another. Let’s use some indicators to see which side the market is currently on.
On the side of the bear market
1) Bitcoin mining difficulty will usher in three consecutive downward adjustments, the longest record since the bear market bottomed out in 2018
According to data provided by BTC.com, the difficulty of Bitcoin mining will be reduced by 11.12%. On June 6th and May 30th, the network recorded two difficulty reductions (-5.30% and -15.97% respectively), and the mining difficulty dropped from 25.046 T to 19.932 T within one month. The last time Bitcoin’s mining difficulty was reduced three times in a row was in December 2018. At that time, the cryptocurrency market was in a “death spiral” triggered by miners: miners shut down one after another, and the price of BTC fell rapidly, on December 15, 2018. It fell to a low of $3,125 on the day, which is an 84% correction from the high in December 2017.
2) Institutional selling: Bitcoin fund holdings hit a four-month low
According to Bytetreeam data, as of June 19, the number of bitcoins held by various bitcoin funds (the United States, Canada closed-end funds and Canadian and European bitcoin ETF data statistics) held 782558 bitcoins, and the holdings were significantly reduced by more than 15,000 in three days. , The lowest level since February 25. Bitcoin holdings of various Bitcoin funds have increased by more than 300,000 Bitcoins since October 2020, reaching a peak of more than 817,000 Bitcoins on May 12, and have since declined.
3) The 120-day moving average falls below
For traders, the 120-day moving average is the lifeline reflecting asset price trends and an important indicator for judging the mid- and long-term trends of asset prices. It has a strong role in helping price trends to rise and fall. That is: the price runs below the 120-day moving average for a long time, and once the moving average breaks through, it usually means that the market reverses and starts an upward trend. When the price is higher than the 120-day moving average for a long time, once it breaks below, it usually means that the market starts a downward trend.
The last round of Bitcoin’s bull market started in October 2015, and the sign signal was that the price of BTC exceeded $250 and stood above the 120-day moving average. In January 2018, the BTC price fell below $10,000, falling below the 120-day moving average. The period lasted for 2 years, an increase of 40 times.
This bull market originally started in March 2019, and the sign signal was that the BTC price broke through $3,800 and stood above the 120-day moving average. However, the “312” black swan incident that occurred during this period disrupted this rhythm. In April 2020, the price of BTC exceeded $8,000 and stood above the 120-day moving average. After that, it was formally declared to enter the bull market. In May 2021, the BTC price fell below $50,000, falling below the 120-day moving average. The period lasted for 1 year, an increase of 6 times.
4) Enter “Death Cross”
At present, the price of Bitcoin has entered a “death cross”. According to Coindesk’s previous article, the “death cross” may herald a Bitcoin bear market. It is reported that when the 50-day moving average is lower than the 200-day moving average, there will be a death cross. If this happens, Bitcoin may enter a bear market similar to 2018. The previous death cross led to a further 70% and 47% drop in Bitcoin prices in 2018 and 2019.
5) The “biggest pain point” dropped for two consecutive months
This Friday (June 25) is the delivery day of the options market. The total number of contracts that expire this time is 68,586 BTC, and the biggest pain point is $40,000. The biggest pain point refers to the most painful option buyer at this price, that is, the biggest loss, that is, the loss of all the premiums, while the option seller (mostly institutions) gains the most. The option price has a guiding significance to the spot price. When the option price is higher than the spot price, it indicates that the market is bullish and vice versa. Since April, the biggest pain point has been declining, indicating that the market is not optimistic about the outlook.
6) The occurrence of landmark events
In the last bull market, Bitcoin reached the highest point of the bull market on the day when Bitcoin futures trading was launched on the CME Chicago Board of Trade. In this bull market, Bitcoin reached its highest point on the day of its listing on the Coinbase exchange.
The Ethereum Foundation cashed out . At the high point of the last bull market, Vitalik Buterin arranged for the foundation to sell 70,000 Ethereum at the price of Ethereum at around $1,400. At the same time, it sold its own 30,000 Ethereum and cashed out 22 million U.S. dollars. On May 17 this year, the Ethereum Foundation’s address transferred 35,000 ETH to the exchange, valued at approximately 123 million U.S. dollars.
Number of downloads on Coinbase . In December 2017, the Bitcoin trading platform Coinbase APP was ranked No. 1 in the U.S. Apple Store App Ranking. In May 2021, the application of cryptocurrency trading platform Coinbase surpassed TikTok, YouTube, Facebook, Instagram and Robinhood, ranking first in the US Apple App Store free apps list.
On the side of the bull market
1) PlanB: Bitcoin reaches $135,000 by the end of the year
The BTC-S2F model created by PlanB is the most solid model to guide Bitcoin believers. According to this model, the current reasonable valuation of Bitcoin is 92,000 USD. PlanB said on Twitter today that by the end of 2021, the transaction price of Bitcoin may reach $135,000.
Overall, in the past few years, the BTC-S2F model has been roughly consistent with Bitcoin prices. The price of BTC always fluctuates around this indicator. Currently, the BTC price is below this indicator and needs to rise to return to a reasonable valuation position.
2) Jiang Zhuoer’s cumulative increase of BTC on the 60th
Jiang Zhuoer’s 60-day cumulative BTC increase index was created by Jiang Zhuoer, CEO of Lebit Mining Pool. The author believes that when the market sentiment is frenzied and the bubble is serious at the end of a bull market, and the short-term currency price increase exceeds the rate of newcomers and new funds entering the market, the bull market bubble will burst and the bear market will begin. This process is described in mathematical language, that is, the “60-day cumulative increase” is too high.
When the two bull markets peaked in 2013 and 2017, the indicator was 237% and 134%, respectively. Currently, this indicator is -38.25%. Even when Bitcoin reached $64,000 some time ago, the indicator was 34%. The amplitude is much lower than the previous two.
3) The total value of bitcoins transferred from mining pools to exchanges by miners continues to decline
According to data from CryptoQuant, the data of several major mining pools including Binance Pool, BTC.com, BTC.top, F2Pool, Poolin, Slush, Viabtc, etc. have been combined. Since January 2021, the number of miners from mining pools to exchanges The total value of Bitcoin continues to decline. This means that the miners’ smashing efforts are decreasing. However, this data counts that the value of bitcoins transferred to the exchange is decreasing. Therefore, the data cannot directly indicate that miners are reluctant to sell bitcoins. First, the price of Bitcoin has nearly halved since the beginning of the year. Second, the path for miners to sell large bitcoins is not necessarily on exchanges.
4) Spot exchange inflows have fallen to the lowest level in the past month
According to AMBCrypto news, according to CryptoQuant data, the inflow of spot exchanges has dropped to the lowest level in the past month. The decline in spot inflows can be inferred as a major indicator of the decline in selling pressure.
5) Su Zhu, founder of Three Arrows Capital: Bitcoin rose to 72,000 US dollars
Three Arrow Capital occupies an important position in foreign exchange transactions in global emerging markets, and once accounted for nearly 8% of the foreign exchange transactions in global emerging markets. Su Zhu, the founder of Three Arrows Capital, worked as a derivatives trader at Credit Suisse and Deutsche Bank in Hong Kong before founding Three Arrows Capital. He has a keen sense of the market.
On May 8, Su Zhu tweeted that Bitcoin rose to 72,000 US dollars. However, the price of Bitcoin continued to fall after that. Recently, he said in a podcast program that although the callback is cruel, it does not necessarily indicate that the entire market is over. Institutional investors can take advantage of the callback to enter the market.
6) Bloomberg Cryptocurrency Report: Bitcoin’s next step is $100,000
On June 4, Mike McGlone, a senior commodity strategist at Bloomberg BI, released a report “Bloomberg Crypto Outlook–Discounted and Refreshed”, which pointed out that Bitcoin is more likely to break through resistance and rise to $100,000 instead of falling into 20,000. Below USD.
The logic supporting this argument is that compared with most major asset classes (especially the S&P 500 Index), Bitcoin’s 260-day volatility has fallen to its lowest level ever. Bitcoin production cuts have led to daily supply reductions, institutional investors joining, Ethereum futures, and the launch of ETFs in Canada and Europe.
7) Continuous project financing
In the last 5 days alone, there have been at least 12 projects in the industry that have announced financing, with a financing amount of more than US$400 million.
8) Listed companies continue to buy
On June 21, MicroStrategy purchased 13,005 bitcoins for US$489 million in cash, with an average price of US$37,617 per bitcoin. As of June 21, it had acquired 105,085 bitcoins for US$2.741 billion, with an average price of US$26,080 per bitcoin.
In addition, Bitcoin has locked the Taproot upgrade, which is expected to be activated in November. The Ethereum London upgrade will be launched on July 14, which may bring about huge changes to the entire Ethereum ecosystem and even the market. The story of L2 has not yet unfolded, and NFT is also worth looking forward to. There are also countries like El Salvador that use Bitcoin as legal tender, and other small countries such as Paraguay are likely to follow. And news that the Fed is unlikely to raise interest rates this year seem to support the continued bull market.