As traders say, predicting a bottom is like trying to catch a falling knife. The term bottoming is easily misunderstood as it does not necessarily imply that price action and the general sentiment of the cryptocurrency market will suddenly turn positive. Prices plummeted as investors slowly pulled out of their support and sold, sometimes even dumping their tokens. While the market is required to slowly turn positive, generally speaking, the indicator of recession needs to be maximized first.
As interest in crypto fades and a bear market arrives, performance-wise, content creators will spend less time on crypto, most new entrants count losses and call crypto a scam, celebrities stop talking about crypto, Crypto prices fell 80%-90% from the top, mainstream financial media stopped mentioning crypto, miners capitulated, funds and projects went bankrupt, wealthy investors (and companies) began to sell crypto assets, and crypto whales began to wake up and make a difference action etc.
At present, the signs of a bear market have become obvious, and it is difficult to predict when the breakout from the bear market will occur, but the macro is still having a strong impact on the price direction. For such a situation, different investors have different views and analyses.
Looking at the short-term, after a strong week, the price appears to be poised to revisit the 22k support for the crypto market, according to analysts analysing technical indicators.
In the long run, after a difficult second quarter, the earnings of miners are generally lower, but the bear market is not over. Bitcoin miner Marathon Digital lost $1.92 in the second quarter, up from a net loss of $109 million in the second quarter of 2021, and mined 707 bitcoins in the second quarter, a 44 percent decrease from the previous quarter. Meanwhile, bitcoin reserves held at the same time also lost $127.6 million in value during the quarter. Bitcoin miner CleanSpark posted a net loss of $29.3 million on revenue of $31 million in the third quarter of its fiscal year that ended in June, compared with a net loss of just $170,000 in the previous quarter.
In addition, bitcoin miner Riot Blockchain (RIOT) delayed disclosing its quarterly earnings report as it needed more time to calculate how much the fall in the cryptocurrency, the war in Ukraine and other macroeconomic issues affected the value of its assets. The company disclosed the delay in a filing with the Securities and Exchange Commission on Tuesday. Earlier news, Riot Blockchain produced 318 BTC in July, a decrease of about 28% compared with 443 BTC in July 2021.
Data from the mining industry suggests that the bear market cycle in the sluggish Bitcoin market is in full force. Analysts believe that, generally speaking, in the late stage of a bear market, long-term holders and miners will face significant capitulation pressure. While the bear market is not over yet, we are approaching a bottom.
The impact at the macro level continues. Oanda analyst Craig Erlam said that weaker inflation data may be the catalyst for Bitcoin to break through $25,000 per coin, and once again target the range of $28,000 to $32,000 per coin, since this year Bitcoin prices have not traded in this range since early summer. Given that core inflation is expected to rise, it will be difficult for the Fed to raise rates by less than 75 basis points without a slowdown in headline inflation.
Meanwhile, Fed Kashkari noted that we could be in a recession in the near future. The risk of a recession will not prevent us from taking the necessary action and we will bring inflation down to 2%. The idea of a rate cut early next year is “unrealistic”. A more realistic approach would be to raise interest rates until inflation falls to 2%. Fed rates are expected to hit 3.9% by the end of (this year) and 4.4% by the end of 2023. In this case, Bitcoin’s breakthrough may still be a while in the making.
Mike Novogratz, CEO of cryptocurrency investment agency Galaxy Digital, said he was happy with bitcoin’s price of between $20,000 and $30,000 by the end of the year. ARK Invest says leverage is being lifted across the ecosystem, paving the way for Bitcoin’s recovery. Bloomberg analysts also believe that Bitcoin to $100,000 is only a “matter of time.”
SkyBridge Capital founder Anthony Scaramucci said he remains bullish on Bitcoin in the long run. Wallets are growing exponentially. Bitcoin transactions are growing exponentially… Over time Bitcoin will be a system of peer-to-peer trading channels for a large part of the economy, investors should stay calm and consider staying.
The drop in network activity can be explained by a lack of new demand for the network by speculative traders and investors with high confidence in the technology, blockchain analytics firm Glassnode analyzed. There is currently no additional demand in sight to sustain further price gains. Longer term, momentum suggests the worst of the capitulation may be over, but markets may take longer to recover as fundamental repairs continue.