What Bitcoin’s departure to a new cycle low says about the market
Bitcoin was able to hold $20,000 through times of expected volatility, sparking speculation that the digital asset had finally bottomed. However, recent developments in the crypto market showed that the cryptocurrency had not actually bottomed, falling lower than the previous cycle low.
What triggered the decline
One thing that bitcoin and the crypto market have proven time and time again is that it is impossible to predict what will happen. A week ago, no one would have thought the second largest crypto exchange by trading volume would collapse and look at acquisitions. The market then followed with bitcoin falling to a new low.
When the news broke that Binance would buy FTX to prevent it from going bankrupt, there had been a recovery in the market as some normalcy was registered. But investors quickly realized the gravity of the situation and the price of bitcoin fell in response.
Shorts in the market had already piled up following Binance’s plans to sell FTT tokens. The resulting market decline was a culmination of that. As investors became more fearful, funds were withdrawn from exchanges, ending the rally that the market had seen.
BTC sees new cycle low | Source: BTUCSD on TradingView.com
Bitcoin reacted negatively to this and dragged the rest of the market down with it. Now a new cycle low has been established, which shows that there may actually be more decline in store for the digital resource.
Is Bitcoin Going Lower?
By the end of the trading day on Tuesday, bitcoin had marked a new cycle low of $17,200, beating the previous value of $17,600. It showed that the digital asset had not actually bottomed out. Additionally, it points to a possible adherence to the established trend with bitcoin falling 80% from its all-time high value before marking a bottom.
However, Bitcoin’s price is still a long way from marking such a bottom. If it sticks to this trend, the bottom would be around $13,000 for bitcoin, which would put it about 82% below the all-time high of $69,000. This would be more in line with previous cycle lows and would clearly mark a restart of a bull market.
Bitcoin still hasn’t been able to find a breakeven point after touching $17,000 on Tuesday. It remains reasonable that a test of $17,000 will be in the works while the Binance-FTX deal is hashed out. This has also given the bears control over the market, and they can continue to pull down the value without significant support in sight.
Featured image from Investor's Business Daily, chart from TradingView.com
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