According to some analysts, bitcoin’s price may be recovering.
After the collapse in late April and early May, which ended with the flash crash on 19 May when the price of BTC hit $30,000, a relatively long period of lateralization took place with price fluctuations between around $30,000 and $40,000.
During these six weeks, the lowest peak was reached on 22 June, when the price dropped below $29,000 for a short time, while the highest peak was reached on 20 May above $41,500, again for a short time.
However, some on-chain data seems to suggest that the lateralization phase may be coming to an end, with the price of bitcoin possibly rising again.
Analyses on the price of bitcoin
For example, analyst Willy Woo argued during a recent interview for the podcast “What Bitcoin Did” that the bearish phase that began in mid-April is over, namely because some on-chain indicators are showing signs of recovery, and because bitcoin is again being bought by investors who want to hold it for the long term.
According to Woo, the bitcoin market would not currently be in a typical bearish phase, but instead would be in an accumulation phase during which a lot of BTC changes hands from weak to strong, i.e. those who buy it to hold it.
However, the current phase would be largely speculative, with a different cycle to those of the past.
Woo argues that bitcoin’s recent price movements resemble those of Wyckoff‘s accumulation pattern, and the recent drop below $29,000 could be the final test of the bottom.
Santiment has also noted a similar pattern, as the percentage of BTC held on exchanges has been falling sharply and steadily since mid-May.
Following #Bitcoin‘s mid-May dip, the supply of $BTC sitting on exchanges has steadily fallen back down and locked away for safe keeping by hodlers. This is a good sign for #bulls, as funds moving away from exchanges lowers the risk of major sell-offs. https://t.co/ABkcih9ea1 pic.twitter.com/NqU3ljRyIH
— Santiment (@santimentfeed) June 30, 2021
From this point of view, the current level is similar to that at the beginning of January, i.e. just before the triggering of the speculative mini-bubble in February and March, which then burst in mid-April.
Other analysts have also pointed out that there are a number of on-chain metrics that point to a possible short-term recovery in the price of bitcoin, but they do not all agree.
In particular, some say they are concerned that the current price is well below that indicated by, for example, PlanB’s stock-to-flow model, as this model is now widely used, but indicates a reference price of as much as $76,000 at the moment.
However, this model places the peak of the 2021 bullrun on 17 August, whereas historically annual bitcoin price bullruns have always peaked between the end of November and mid-December.
There are also those who argue that in order to continue the bullrun that began in December 2020, June would have to close with a price above $34,500, and indeed the closing price on 30 June was around $35,000.
So far, this current period in the 2021 cycle is very similar to the 2013 mid-cycle correction
A #BTC Monthly Candle Close above ~$34500 would mean that BTC will continue to respect historical Mid-Cycle tendencies$BTC #Crypto #Bitcoin
— Rekt Capital (@rektcapital) June 30, 2021
It is possible that an excess of enthusiasm, perhaps linked to an excessively fast (and therefore steep) stock-to-flow curve, pushed the price of bitcoin up too high in the early part of the year, and then generated an excess of fear as the excess of enthusiasm subsided and the price returned to levels more in line with the long-term trend.
Once the excessive fear ends, the price of bitcoin could resume its run. For example, the fear and enthusiasm index in the crypto markets has been rising for the past few days from the lows of a couple of weeks ago.
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