Digital currency investing and cryptocurrency asset management Grayscale explained that the Bitcoin price may witness another 5 to 6 months of downward movement. “Bitcoin is 222 days off the all-time high, which means we may see another 5-6 months of downward or sideways price movement,” they detailed.
Backing the basis of their argument, the Grayscale team referenced the traditional 4-year Bitcoin and crypto cycle. A report was released by the team of experts from Grayscale, dissecting the current bitcoin bear market.
The world’s largest digital asset manager released a report within the week titled “Bear Markets in Perspective.” In the report, the firm explained;
“The length, time to peak and trough, and recovery time to previous all-time highs in each market cycle may suggest that the current market may resemble previous cycles, which have resulted in the crypto industry continuing to innovate and push new highs.”
the report also details “Crypto market cycles, on average, last ~4 years or approximately 1,275 days.”
They explained in detail the 2012 and 2016 cycle and how it lasted about 1,290 and 1,257 days respectively which is approximately 4 years. Also, the time duration for Bitcoin to go from peak position to bottom position when it dropped 73% in 2012 was 391 days, and 364 days to fall 84% in 2016.
Most Bitcoin experienced traders are familiar with the market cycle knowing that it is based on the halving cycle. The Grayscale also made sure to define this cycle and show that it works out over a four-year period.
Grayscale explained;
“While methods vary for identifying crypto market cycles, we can quantitatively define a cycle by when the realized price moves below the market price (the current trading price of an asset), using bitcoin prices as a proxy.”
“In the current 2020 cycle, we are 1,198 days in as of July 12, 2022, which could represent another approximate four months left in this cycle until the Realized Price crosses back above the Market Price. Bitcoin is 222 days off the all-time high, which means we may see another 5-6 months of downward or sideways price movement.”
The grayscale team also noticed an increase in wallets that are holding 0.001 to 1 BTC. The reason for that was explained as crypto investors who took the bear market as an opportunity to stock their wallets with Bitcoin. They said;
“Many of these [Bitcoin] outflows [from exchanges] could be due to investors taking this opportunity to increase their position sizes at a discount.
The number of wallet addresses holding .001-.01 BTC, .01-.1 BTC and .1-1 BTC has increased sharply, reaching new all-time highs.
This marks an interesting change in market sentiment as, historically, smaller investors have decreased their positions sizes in times of uncertainty – notably in 2018 after the price of Bitcoin fell from ~$20k.”
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