A look at the price of Bitcoin

There are widespread rumblings from various sides about the approaching bottom of Bitcoin’s price chart, to the point that some are already suggesting it is time to be buying Digital Gold in full force. 

On Twitter, Bitcoin Magazine reported an important statement by legendary investor Bill Miller about beloved Bitcoin. 

According to Miller:

“People have escaped from space, so the fact that it’s still there at $17,000 is pretty remarkable.”

The remark is an endorsement of BTC’s base value, which according to the billionaire, despite all that has shaken the cryptocurrency market and despite a bear market that has lasted for a year and a half now, the price of the digital currency has held up at $17,000 giving a great sign of strength. 

The RSI (Relative Strength Index) is a metric that provides a pulse on how volatile the price of a security or digital currency is and the strength it has at any given time.

The figure has reached, as far as Bitcoin is concerned, 40.5, which is an all-time low for the digital currency. 

This signal often indicates that a cryptocurrency is “scraping the bottom of the barrel” that is, about to hit bottom and is one among the indicators of the bottom. 

Catching the low from which to go all in is virtually impossible and conceptually wrong but it is obvious that if there were a formula for finding the bottom we would be looking at the holy grail of the markets. 

A second indicator, however, gives us a hint that the bottom for Bitcoin is not far away but before going into specifics it is necessary to make a premise. 

Bear market, geopolitical uncertainty, and Bitcoin’s price chart

The bear market we have been experiencing now for a little less than half of 2022 is an anomalous market “soiled” by some important variables and therefore difficult to understand even by the most experienced analysts. 

Bitcoin’s performance is affected by major variables such as hyperinflation and the monetary policies of Chairman Jerome Powell‘s Federal Reserve, the war in Ukraine with the Russian superpower that has put the entire world on alert, the danger of the return of a pandemic, the energy crisis, and the ecological transition. 

All of the factors mentioned, directly and indirectly affect the price of crypto, which as a result is very volatile. 

In addition, in this year and a half many Bitcoin holders, especially last-minute investors have opted out of the investment and also many miners have followed the same fate given the low cost/benefit ratio. 

This flight of capital is an additional market maker, a factor that usually affects the price of a cryptocurrency by a lot but as far as Bitcoin is concerned this has happened less than expected given that some were already giving it at $10,000 by 2022.

As I write the price of the digital currency par excellence stands at 15,892.02 euros about $16,850 confirming the low Miller mentioned just above. 

The other important factor that ties Bitcoin to this moment in the current bear market is the fact that historically the price of Bitcoin during each bear market, leaves between 70% and 80% of its value on the field and right now BTC has lost 75% in the current cyclical phase of the market. 

Another data point in favor of the thesis that both Bitcoin’s bottom and the bear market are close to the finish line is the fact that on average this market phase lasts no more than a year to a year and a half, and in this respect, too, statistics come to our rescue and give us hope. 

However, these considerations leave time to be found when we consider the countless factors that have intervened in this abnormal market phase, it is very premature to say when and if the market will recover. 

The fight against inflation is still long, and the cryptocurrency market is struggling to pull itself out of the doldrums of failures it has run into in 2022. 

Failures in the crypto market

Starting with the failure of Terra/Luna, through the Three Arrows Capital disaster and finally to the FTX debacle and the arrest of Sam Bankman-Fried led the contagion of dozens of other Exchanges this year, paradoxically serving the crypto world to skim and cleanse the market of all the unserious companies that populated it while leaving standing the companies that bring value to the industry. 

If we shift our gaze a little further to restore hope there is also in the distance the next BTC halving that is expected to occur around April/May 2024. 

The halving occurs every 4 years or so and is basically the halving of the reward paid to Miners for mining Bitcoin every 10 minutes or so, that is, the halving of the BTC paid to miners for the service performed. 

So, another year and a half of waiting to relive Bitcoin’s biggest ever flywheel, the real market mover that attracts investors into this world, people who try to ride the trend when it goes up. 

While Bitcoin accumulation in the investor world has visibly slowed, that of Digital Gold in the United States is bucking the trend and more and more Americans are making BTC purchases. 

Currently, BTC’s retracement is around 0.78 and analysts give the situation fairly static throughout the holidays and some go so far as to say that the situation will remain the same even through the entire first month of the new year.