- Bitcoin risked leading a market cap fall to $620 billion, according to an analyst
- Volatility ensured that Bitcoin remained more balanced
Bitcoin [BTC] investors might have another cause to fret because the crypto market capitalization risked another fall, CryptoQuant analyst Ghoddusifar revealed.
The analyst mentioned that a $1 trillion recovery should not be the short-term concern. Instead, investors should be distressed about the possibility of the entire market cap plunging to $620 billion.
Read Bitcoin’s [BTC] Price Prediction 2023-2024
Be on guard
According to Ghoddusifar, the reason for this projection was due to the breakdown of the rising wedge pattern. In the chart shown by the analyst, the crypto market cap lost support of a potential market cap increase. Thus, it was reverting towards a bearish trend.
Source: CryptoQuant
In supporting his stance, the analyst referred to previous cycles where the wedge break resulted in his forecasted outcome. The opinion could hold some credibility, even though the market cap was $857.66 billion at press time.
According to Glassnode, the Bitcoin Realized HODL (RHODL) ratio was 242.60. For context, the RHODL ratio determined overheated market conditions and market tops. Therefore, the ratio’s deficient status implied that the market was not at an overheated supply rate.
Hence, the current BTC value was nowhere close to hitting tops. Since Bitcoin had an extravagant impact on market direction, this could affect the further decrease of the market cap.
Source: Glassnode
With reference to the exchange flow, Santiment showed that the influx and outpouring were at close range. At the time of writing, BTC’s exchange inflow was 5128. Meanwhile, the exchange outflow was 6065.
Since inflow and outflow were not extraordinarily large, it was unlikely to expect a lightning price growth. Similarly, a notable price fall might not be imminent. So, this could help create a balance to avoid massive market capitulation.
Source: Santiment
Will volatility rescue Bitcoin?
On an extended assessment, Bitcoin deteriorated per its volatility. This was because the one-week realized volatility, at press time, was 30.33%. At this phase, it meant that the market was not in a high-risk mode. This implied that returns on volatility remained in a low state over the seven-day window, yielding only a minimal increase.
Source: Glassnode
As for the stock-to-flow ratio, Santiment showed that BTC’ supply was in abundance. According to the on-chain data, the ratio had spiked to 212 — a 150% increase from 9 December.
As compared to BTC’s price, which aimed to remain above $17,000, the stock-to-flow showed improved minting.
Source: Santiment
Considering the condition of these metrics, it was possible that Bitcoin could escape the Ghoddisfar-projected dump. However, the king coin might require immense strength to neutralize the possibility.
Irrespective of the events, BTC addresses seemed to have taken advantage of the discount currently offered.
🐳🦈 There are now 151,080 addresses that hold between 10 to 1,000 $BTC. After a massive decline that began in December, 2020, these addresses have increased significantly throughout 2022 as #Bitcoin has progressively become more affordable. https://t.co/5rdAno5SKy pic.twitter.com/uahECloHyR
— Santiment (@santimentfeed) December 11, 2022
Source: https://ambcrypto.com/can-btcs-market-cap-drop-to-650-billion-in-light-of-these-investor-centric-updates/