Analysts say Bitcoin range ‘consolidation’ is most likely until a ‘macro catalyst’ emerges

Historical perspective shows that the decline in cryptocurrency market value over the past few months has been a record-breaking one. The total cryptocurrency market cap fell from $3 trillion down to $991 million.

Investors felt especially pain in June after Bitcoin’s (BTC) price fell almost 40%. This was according to a Delphi Digital report. It was one of the worst calendar months ever recorded, and it was particularly painful for them.

BTC/USD monthly candles vs. the MoM% Change. Source: Delphi Digital

A number of BTC price and other on-chain metrics have started to reach levels similar those seen during past market bottoms. However, traders shouldn’t expect a turnaround anytime soon. History has shown that periods of weakness can last for months.

BTC price affected by macro headwinds

The strength of the United States Dollar is one of the biggest factors that weigh on cryptocurrency and other risk assets.

DXY Index YoY% Change vs. Bitcoin/USD Price YoY% Change Source: Delphi Digital

Combining rising inflation with falling economic indicators, DXY strength signals that an economic slowdown may be imminent. Forecasts are now for a recession in the early to mid-2023.

BTC is now trying to find a local bottom at the 2017 cycle high of $20,000, which “the last clear structural support for the high-timeframe bitcoin chart.”

BTC/USD price-performance 1-week chart. Source: Delphi Digital

This is the first time that Bitcoin’s price has fallen below its all-time high during a bull market cycle. Delphi Digital indicated that if BTC fails to maintain support at $20,000, it would expect to see support around $15K and then $9K to $12K if this level is not reached.

These estimates might seem grim, but it is important to note that BTC prices fell approximately 85% between peak and trough in each of the previous major bear markets.

BTC would fall by 50% to $10,000 if the bear market cycles continues.

Delphi Digital analysts believe that there is still pain for risk assets.

Related: Bitcoin faces new lows with $20K in the face of dollar euro parity

Is there a bottom?

According to Delphi Digital, the percentage of Bitcoin supply that is held in profit and Bitcoin’s realized profit/loss ratio are close to levels seen during bear markets. However, each one has “a little more room to go” before they reach this cycle’s lows.

BTC/USD Price vs. Realized P/L Ratio Source: Delphi Digital

According to the firm, “momentum indicator and valuation metrics can stay oversold for an extended time,” which makes them “poor tools for timing” that cannot predict immediate reversals.

Investors who are not contrarian may also be interested in the market sentiment and the Fear and Greed Index, which have now fallen to historic lows.

BTC/USD Price vs. Fear and Greed Index. Source: Delphi Digital

Delphi Digital stated that BTC could move higher due to the liquidation cascade following 3AC. They also identified $28,000 as the next major resistance level.

Delphi Digital said,

“BTC will continue to consolidate up until we get some sort of macro catalyst.” You should do your research before making any investment or trading decision.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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