When Will Bitcoin Find Its Bottom?
Bitcoin’s price has plummeted to its lowest since late February, with one on-chain analyst predicting a further 16% drop to $47,000 as the cryptocurrency’s next bottom.
An Overdue Pullback
This week, CryptoQuant author Adel Axel Jr. suggested $47,000 reflects a 25% discount from the average purchase price of short-term Bitcoin holders, based on recent blockchain data. According to LookIntoBitcoin, the short-term holder realized price was $64,614 as of Wednesday.
Axel noted, “This level will likely act as a significant resistance point and a shakeout for new buyers.” He added, “Previous organic corrections in the bull market lasted between 110 to 60 days.”
Analysis suggests this price often triggers capitulation among new market entrants, who panic sell when their investments turn negative. Axel also highlighted the $46,300 price level – the average entrance price for buyers within the past year. CryptoQuant data reveals over $2.3 billion worth of coins moved on-chain on Thursday were last moved this year, while older coins saw a less significant selloff.
As of Friday, Bitcoin trades at $56,374, down 20.73% over the past month.
An Overdue Pullback
Many analysts believe Bitcoin’s recent pullback was long overdue. This week marks the first time since late 2022 that Bitcoin has retreated more than 20% from its local highs, now down 23.58% from its all-time high of $73,700 in March. In comparison, Bitcoin experienced multiple pullbacks of over 20% to 30% while continuously breaking new highs in 2017.
In March 2020, the cryptocurrency underwent a 60% correction amid Covid-19 related panic before surging almost 20X over the next 13 months.
The current Bitcoin market is arguably rattled by a new type of panic: on Friday, bankrupt Bitcoin exchange Mt. Gox announced it had begun repaying customers their long-lost Bitcoin, of which 138,985 BTC ($7.52B) still remains. However, CryptoQuant’s Axel contends that true “panic” has yet to set in, suggesting more volatility ahead.
“In the current situation, 47K doesn’t look as terrible as it did three weeks ago when we were at 70K,” he wrote on Friday. “We need more shakeout, but at a slower pace.”
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