The price of bitcoin has taken a plunge of 30% in the past seven days, touching the $21,000 range. This has caused panic in the markets, with firms such as Celsius freezing, withdrawals and crypto.com, Block Fi, and Coin base all announcing layoffs coming soon as the market tumbles. There’s no doubt that the bears have taken over the market, but now the question is how low this go on chain will?
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Analyst Willy Woo took to twitter to give insight on where he sees the market going, and his research is showing that we can go lower than the 20,000 dollar level.
In his first tweet, he stated,
‘Here’s a summary of price models for generational BTC bottoms:
200 a week MA – done $22k
Cost basis analysis – not yet
CVDD – plenty of downside room’
This may have been the last tweet read as it went into detail to explain how he came about the summary. His first in-depth tweet regarding bitcoin price action stated,
‘First up… Everyone’s looking at the 200 week moving average. It’s $22k. It’s worked well in the past. Even during the early years, it has caught every generational bottom. Bear in mind that this entire phase of BTC price action was during a prolonged macro bull market post 2008’.
The tweet was accompanied by a price model chart. The 200 SMA has acted as key support throughout bitcoin’s lifetime, with only brief wicks below it marking generational spot price bottoms. The 200 SMA has never broken its own uptrend and the hope is that reaching it will allow bulls a period of relief. Many other analysts are also throwing in the fact that bitcoin’s entire history has been during the entire macro bull run since 2008.
So, Woo continued,
‘Realized Price, the cost basis of the entire coin supply sits at $23.2k. Normally we dip below this figure. Investors are usually deeper underwater at the bottom.
The previous bottoms were 15% below during COVID, 30% below at the 2018 bottom, and 45% below at the 2015 bottom’.
After dipping below $22,372, the price has traded below its 200-week moving average since the week of March 9th, 2020. This was just before the start of the pandemic lockdown despite the fall from a high of around $69,000. The current price is still some 525% above that March 2020 low.
Willy’s next tweet stated,
‘MVRV visualizes what I just said… It’s the market price vs. the cost basis for all of the coins. We’re just entering a loss scenario. There’s room to go deeper underwater. (i.e. MVRV drops below the horizontal line)’.
MVRV (market value to realized value) is a ratio of an asset’s market capitalization versus its realized capitalization. By comparing these two metrics, MVRV can be used to get a sense of when price is above or below fair value and to assess market profitability.
According to Woo, we can go lower and propose that $15,000 is around the bottom. We can see that WOO continued with
‘Profiling the cost basis of the entire supply, past generational bottoms happened when only 36%-43% of coins were left standing at a profit. Right now 51% of coins are still in profit. Still more room to the downside’.
Woo’s final chart showed the cumulative value destroyed. Woo tweeted,
‘Cumulative value days destroyed is a bottom model I created in 2018. It tracks the age of coins moving to new buyers, the idea being when very old coins move to new buyers it raises the perceived floor value.
The CVDD sits at $15.4k, so there’s plenty of room to move lower’.
The low of 15,400 is the same sentiment from another respected analyst, Rekt Capital.
Rekt Capital tweeted out,
‘Historically, $BTC tends to wick -14% to -28% below the 200-MA’.
While a wick of -28% would mean BTC could reach as low as 15,500 before reversing to the upside. They are suggesting a bottom of 11,000, which is 84% below its latest all-time high of 69,900. What do you think about Woo’s tweets?
[This article is a transcription of a video made by Only The SAVVY]
Original video: https://youtu.be/v9FfmsVAikA]