Besides the massive price increases in the last few weeks, there are other signs pointing to the start of the bull market. Charles Edwards, the founder of Capriole fund, showed us why this might be true in his Twitter thread.
The reason we chose to stand by Edwards’ opinions is that he was right when posting about the possible Bitcoin bottom in December 2022. Now he continues to stand by his opinion.
Is Bitcoin back in the game?
Several on-chain metrics, such as trading at its electricity cost for two months straight, indicate that the crypto market has recently emerged from a long-lasting bear market.
Related article: What should happen for Bitcoin to reach $10 million per coin?
This was the second-longest period in Bitcoin‘s history that its price was below its production cost. A very important fact. Another important thing to mention is that Bitcoin’s price jumped back above pre-FTX levels in just two months, indicating there are only a few sellers left.
“The level of deep value was too much to maintain prices that cheap for long, regardless of such negative news and financial damage,” Edwards explained.
According to Edwards, there was a strong confirmation at $20,000 because it represents round number support, the FTX crash level, 2017’s all-time high, crucial order block level, and it was the price when Bitcoin mining became unprofitable.
Another reason for a bullish view is represented by the fact that most moving averages turned upward. Moving averages work similarly to traditional markets and they work better than one might expect. He also pointed out a great cycle timing before the halving event.
“Like clockwork, Bitcoin has bottomed in the window 12-18 months prior to every halving in the past,” Edwards said.
By the end of 2022, the downturn had reached its “common” 80% in a Bitcoin cycle, as it did in 2018 and 2014. Large price cuts like this are unusual and signal a period of economic hardship or industry collapse. This drawdown is now, however, over. Bitcoin fell by almost 80%, with a bottom at approximately $15,500.
“At the end of 2022, the sentiment was at its worst, and market hedging at its highest on record,” he added.
Conclusion
Indeed, the sentiment took a big u-turn, taking both the crypto market along with the equity market higher in the midst of massive pessimism. While interest rates remain high, the bulls used the overly negative sentiment to make a huge short squeeze, which could potentially still be ongoing.
Bitcoin daily chart, source: tradingview.com, author’s analysis
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