As an experienced financial analyst, I’ve closely followed the cryptocurrency market, particularly Bitcoin, for several years now. Based on the available data and trends, I believe we could be seeing the early signs of a bear market for Bitcoin.
Could the current market conditions for Bitcoin be signaling an impending bear trend? A recent market indicator points in this direction.
Beginning on Monday, Bitcoin may be experiencing its fifth successive weekly closing in the red zone. Previously, this occurrence had only taken place during bear market conditions.
A Slow But Steady Pullback
As a crypto investor, I observed an intriguing pattern on Monday that raised some concerns for me. However, my more optimistic followers didn’t appreciate my caution and swiftly voiced their disagreement on Twitter.
As a researcher studying the cryptocurrency market, I’ve observed that the current drawdown, which has continued since late April, is relatively mild compared to past bull markets. The price of Bitcoin reached a weekly high of approximately $71,400 on March 31st. However, by Sunday, it had dropped around 12% to roughly $63,000.
James Check, a senior analyst at Glassnode, made this observation on Friday: Bitcoin has dropped by no more than 20% from its peak of $73,000 during this market cycle. In contrast, the 2017 bull run went through several declines that were over 20%, even reaching as high as 30% in some instances.
As a researcher, I’ve observed an intriguing pattern in the Bitcoin market: specifically, the occurrence of four successive red weekly candles in bull markets. Notably, two of these instances took place following previous Bitcoin halvings, just as we recently experienced.
What About The ETFs?
Despite the fact that significant declines are common in a bull market, some are taken aback by the selling pressure affecting newly introduced Bitcoin spot ETFs.
Over the past few months, more than $12 billion in new investments have poured into these funds starting from January. However, this trend has slowed down significantly over the last month, with withdrawals from the Grayscale Bitcoin Trust (GBTC) frequently outpacing contributions to all other Bitcoin ETFs together.
As a macro investment analyst, I’ve come across Jim Bianco’s perspective that retail investors, or “degen retail” as he labels them, have been the primary buyers of Bitcoin ETFs to date. This observation holds bearish implications for the cryptocurrency market, in my view, because these investors are likely to sell off their holdings at the slightest sign of trouble. With their cost basis set at $58,000 per Bitcoin, any significant price drop below that level could trigger a mass exit from this segment of the market.
In response, Eric Balchunas, an ETF analyst at Bloomberg, offered a contrasting perspective. He pointed out that most investors have yet to disclose their ETF holdings through 13F filings. Additionally, it may take some time for advisors to become significantly involved with newly introduced ETFs, such as BITO, the Bitcoin futures ETF, which has seen only about 40% of its investment holdings managed by advisors after being available for thirty months.
“It’s not a good idea to go against the powerful influence of BlackRock, Fidelity, Invesco, and their extensive wholesaling networks, deep relationships, and loyal advisors who favor their ETFs. Their success stories provide compelling evidence.”
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2024-04-30 02:18