Bitcoin Likely Won’t Fall Further
This is going to alleviate a lot of stress that cryptocurrency enthusiasts have been feeling as of late. Many were wondering if bitcoin had reached the bottom with its drop to the $3,000 range last November, or if more bearish turns were lining up in the coin’s future.
According to a new report released by digital asset research firm Delphi Digital, the currency has officially reached its bottom for this quarter. Authors of the report are suggesting that now may be a good time to purchase new units.
To better understand bitcoin’s behavior, the report analyzes current price trends with those of bitcoin during 2013. The document states:
Analyzing bitcoin’s aggregate UTXO age distribution over time provides insight into the buying and selling patterns of previous market cycles. This allows us to forecast where we are in relation to prior cycles and what we can likely expect going forward… The one year+ holder rate during the potential December bottom is within one percent of the one year+ holder rate during the previous cycle’s bottom in January of 2015.
Bitcoin, as we all remember, was trading for roughly $20,000 in December of 2017 following two years of straight up price gains. The currency appeared unstoppable, and traders had high hopes for the coin, believing it would never fall into bearish hands again.
Unfortunately, this wasn’t meant to be just yet. The following month (January 2018) saw bitcoin drop to $16,000. By February, the currency had fallen to $12,000 and then $9,000 in March. By summer of last year, the currency was trading for just over $6,000, where it remained for some time.
Analysts argued that the correction bitcoin underwent was designed to bring bitcoin down to a more natural price, but nobody expected it to fall again following the bitcoin cash hard fork that took place in early November 2018.
It was here when bitcoin fell into the mid-$3,000 range, and it remained there until just a month ago. Now, bitcoin has managed to strike $5,700 territory, which doesn’t compare with where it stood in December of 2017, but it still marks a $2,000 gain since last Thanksgiving.
Things Are Coming to a Halt
The report by Delphi Digital suggests that a slowdown rate is occurring with bitcoin, which is the primary indicator that it had bottomed out prior. The report states:
This slowdown likely marks the end of the high growth period in the one year+ UTXO rate, which makes sense considering the pricing environment and the waning level of new interest we were seeing at this point last year. Slowing global growth expectations but modest economic output provides a favorable backdrop for bitcoin as investors seek out above-average growth opportunities.