The market’s ongoing fear is putting pressure on Bitcoin and other cryptocurrencies.
Following a whirlwind November for Bitcoin, certain on-chain and Bitcoin price metrics indicate that BTC’s bottom may occur in December. In a tweet on December 17, David Puell said that it is almost time for the BTC price bear market to end. He said,
“On-chain, three factors are needed for a bull:
1. Holding behavior from long-term investors.
2. Painful losses from short-term speculators.
3. Network activity across the board.
Personally, seeing 1 and 2. 3 is still underwhelming.”
Now, What Does It Mean?
On Sunday, the BTC/USD pair was expected to find immediate support near $16,560. Because the RSI and MACD indicators are in the oversold zone, Bitcoin prices could surge to the 23.6% Fibonacci retracement level of $17,000. Many traders are forecasting new BTC/USD lows of $12,000 or less this cycle. However, not everyone is pessimistic about Bitcoin’s prospects.
Despite Bitcoin being down more than 70% from its all-time high, long-term holders (LTHs) are resisting the urge to sell. Simultaneously, short-term “speculators” are feeling acute pain as a result of recent price action. In this context, Puell went on to say that “favorable” macroeconomic conditions would help the recovery.
This viewpoint is consistent with others who have called for patience in light of the current BTC price performance. For instance, Bitcoin’s MVRV-z score provided evidence. It is an expression of market cap to realized cap in standard deviations. The metric was initially known as “Market-Value-to-Realized-Value Temperature (MVRVT)” by Dilution-proof. At the time of writing, accompanying charts indicated signs of a classic bear market bottom formation. This comes with Dilution-proof showing that Bitcoin “is just doing what it does at this post-halving date literally every cycle.”
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<source: dilution-proof>
Further, BTC miner capitulation entails miners turning off unprofitable ASICs and selling portions of their Bitcoin reserves to cover expenses. According to Capriole Investments, a floor price forms during miner capitulations before the hash rate begins to improve. Another miner capitulation occurred on November 28, and if the analysis is correct, this will place Bitcoin’s bottom at around $16,915 because the hash rate has begun to rise since the November 28 date.
Conclusion
Given the positive technical indicators, the market is waiting for a critical on-chain signal before entering a typical bull market. The market’s ongoing fear is putting pressure on Bitcoin and other cryptocurrencies. While the markets remain highly correlated with equities and vulnerable to macroeconomic shifts, multiple data points show signs that Bitcoin may be nearing the end of a bottoming process.
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