Has bitcoin hit the bottom? It is plausible, but the majority of observers seem to think not. In favor of the argument that a bottom has been found, there are elements of technical and on-chain analysis that viewed from a certain angle, can support that position.
Look at the weekly candles and you can discern what might become a double bottom, suggesting a trend reversal. Advocates for bullish hints point to an indicator called the Hash Ribbon, which suggests miner capitulation is over (a positive sign), and there is the MVRV Z-score, which has bitcoin now marked out as being significantly undervalued.
According to those perspectives, a bottom might, in normal circumstances, have been ground out already, and it wouldn’t be a bad time to accumulate. But then, we are not in normal circumstances, and so analyses both technical and on-chain are being performed within a novel context. Taking into account the precarious economic environment, it’s reasonable to anticipate erratic price behavior that deviates from previous patterns.
In fact, we’ve already seen evidence of this, when bitcoin crashed to its current cycle low of around $17,700 back in June. This was a departure from its normal behavior in that it dipped lower than the previous cycle’s high (just below $20,000 in December 2017), while in all previous cycles, bitcoin’s low point had remained above the previous cycle’s high point.
And, so we find ourselves in what might be uncharted territory and seriously considering the possibility that this time around, anything could happen. Those not acquainted with bitcoin and its cycles might assume that such unpredictability has always been present, as bitcoin has a reputation for volatility, but volatility and unpredictability are not the same thing, and much depends on your time preference.
Bitcoin volatility has in fact occurred within larger, cyclical, identifiable patterns and, zoomed out, it’s those longer-term predictable trends that have established bitcoin’s status as number go up technology.
Gloom Is Still in the Air
A bleak (or at least short-positioned) mood has become markedly present around bitcoin predictions, echoing a wider sense of frazzled nervousness in the markets.
Perhaps the jitteriness is down to perception (whether real or imagined)…
