Quite a few things happened in 2022, so let’s quickly recap three main events that caused Bitcoin (BTC) price to nosedive during the year.
These are the three main events that caught investors off guard in 2022:
As a result of these three events, Bitcoin price crashed 77.57% from its all-time high of $68,997.75. Despite these fateful outcomes, BTC started looking bullish on November 9. So, let’s take a quick look at what the pioneer crypto’s technicals look like.
Bitcoin price revealed a bullish divergence on the three-day chart on November 9 and has been bullish in that timeframe ever since. After this setup was pointed out by FXStreet, BTC rallied 19% and set up a local top at $18,400.
Going forward, Bitcoin price has three outlooks:
BTC/USDT 1-week chart
Before we get too deep into technicals, let’s take a quick look at miners, who are essentially the backbone of the Bitcoin network. Due to the crypto winter, miners have already suffered two major capitulations – the first one extended from June to August, and the second one started in late November and is still ongoing.
Judging from the historical miner capitulations and Bitcoin price bottoms, the current cycle’s bottom should be around the corner.
The recent drop in difficulty comes around the time Argo Blockchain, one of the big names in the Bitcoin mining industry, fell. As a result of this, trading of ARBK was suspended in the United Kingdom and the United States exchanges on December 9, which coincides with a large drop in mining difficulty.
This plummet in mining difficulty has taken some pressure off the miners, but at the same time, it has also marked the continuation of their capitulation wave. So, a quick downtrend is not outside the realm of possibility for Bitcoin price.
The miner reserve indicator provides an estimate of the number of BTC held by these participants, and it is currently hovering around 1.84 million BTC, worth roughly $30 billion. Therefore, a continuation of the distress faced by miners could result in more selling pressure, causing Bitcoin price to drop lower.
BTC miner reserve
The first and perhaps the most important on-chain metric to determine the possibility of a capitulation is the 365-day Market Value to Realized Value (MVRV) indicator.
This on-chain metric is used to determine the average profit/loss of investors that purchased BTC over the past year. Based on historical data, the bottom for BTC occurred when the MVRV value slipped below -40%.
The nosedive in June and the flash crash in November have caused the 365-day MVRV to hit -45%, which coincides with the 2020 level. However, the on-chain metric is still far away from the 2018 and 2014 levels. This data indicates that a minor downtrend could be likely for Bitcoin price going forward.
BTC 365-day MVRV
Whales and their accumulation patterns are important to determine if the Bitcoin price has bottomed. Historical data shows that addresses holding between 100 to 10,000 BTC have sway over Bitcoin price. The number of these addresses spiked from 15,662 to 15,989 in the last month, denoting an addition of 327 new addresses.
The last time these investors were active was in February when the number of addresses inflated by 274 from 15,870 to 15,596. This move was followed by a $10,000 spike in Bitcoin price from roughly $37,400 to $47,050.
Another interesting data point was between September and November 2021, when these addresses grew from 15,777 to 16,150, suggesting the addition of 373 new addresses. After this spike, the Bitcoin price rose from $40,700 to 66,971 and set up an all-time high.
If history were to repeat itself, this recent accumulation by whales could generate a quick bear market rally in Bitcoin price. This move would correspond to a retest of $28,000, assuming BTC inflations by $10,000 as it did in February.
BTC supply distribution
While the accumulation of BTC is important, the presence of stablecoin-holding whales is more significant to determine and add weight to the possibility of a rally in Bitcoin price.
For this purpose, we will take a look at the number of addresses holding between $100,000 and $10,000,000 stablecoins. The tokens in question include – Tether US (USDT), DAI, USD Coin (USDC) and Binance USD (BUSD).
As seen in the chart below, the USDC and BUSD whale addresses holding between 100,000 and 10,000,000 US Dollars started increasing their holdings after the initial fallout of FTX in November’s first week. For USDT and DAI, these addresses started accumulating around the first week of December.
Clearly, these whales are accumulating for a rainy day, and a potential drop in Bitcoin price to $9,500 would be a perfect scenario to kick-start a new cycle.
Stablecoin supply distribution
Crypto mining provides innovative way of hedging BTC bets in 2023
Cryptocurrency mining has taken off explosively since mid-2016 with the S9 ASIC miner. The evidence can be found in the Joules per Tera Hash improvement of mining rigs since 2009. Crypto mining equipment has become 4,237% more efficient in the last eight years.
Bitcoin hash rate hit a new all-time high of 272 million TH/s in November 2022, which is a 400% increase as compared to the hash rate in October 2018. The latest in the line of ASIC miners include the Antminer S19XP, which has a 5-nanometer chip, which is magnitudes smaller than a human hair.
Mining rig efficiency
Ethan Vera of Luxor pool stated that if there is another miner capitulation wave, the price of Antminer S19XP would counterintuitively go up.
As more miners with older rigs become unprofitable, they would want to upgrade, which would cause an influx of capital into buying the latest S19XP, causing its price to inflate.
Vera details that if the hash price, a metric used to determine the US Dollar revenue a miner earns per unit of hash rate, drops 20%, it would create a demand. According to Blockware Intelligence, the hash price for S19XP calculated at $20,000 per BTC is $0.09.
Apart from providing positive cash flow to the holder, the market value of the miner would go up, making it an innovative hedge, should the Bitcoin price drop further lower from the current position.
Antminer S19 price
With all these aspects in mind, let’s take another look at Bitcoin price and its 11-year history.
If logarithmic regression is applied to Bitcoin price history for the last 11 years, it reveals an interesting pattern. As seen in the chart, BTC bottoms as it enters the green bands, which starts with an accumulation and is followed by a reversal in trend.
So far, all the cycles for BTC, except cycle 3, have bottomed above or around the green bands. Currently, Bitcoin price is at the middle band of the regression line, indicating that the bottom could be close. However, there is also a possibility that the big crypto could slide lower and tag the third band of the regression.
BTC/USD 1-week chart
A closer look at the regression lines reveals that the bottom band is present at roughly $11,898, which coincides with the forecast seen from a technical perspective. To predict the targets for the next run-up in 2023, let’s assume this cycle reverses after forming a local bottom at $11,898. Using the Fibonacci Retracement tool from the all-time high to the aforementioned bottom reveals a few important targets:
The midpoint of the Bitcoin bear-market retracement at $28,092, which also coincides with the levels predicted from a technical perspective at the start of the article. The $28,000-to-$30,000 range is likely to occur for Bitcoin price in mid-2023.
Potential all-time highs at $112,090.32 and $210,252.31, which are the result of the negative 27% and 62% retracement levels. The timeframe for these targets is late 2023 and 2024.
BTC/USD 1-week chart
So the cycle 5 Bitcoin price has already started to look impressively bullish.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Binance.US, the subsidiary of Binance.com in the US, has laid off a significant number of its personnel, only weeks after the parent company also lost its high-ranking officers to layoffs and resignations.
Optimism price bounced back over the past day after noting a two-month low. The altcoin is exhibiting bullish signals. However, its bullish bias might face some resistance if the short-term investors decide to exit to prevent any potential losses going forward.
Stellar (XLM) token has indicated strong volatility over the last few months, with the price action consolidating within a triangle pattern. As the technical formation fills up, XLM is likely to break below from a technical standpoint, despite social metrics indicating growing popularity.
Crypto exchange CoinEx fell victim to cybercrime earlier in the day as perpetrators managed to steal millions of dollars worth of crypto assets. While the exchange reassured 100% compensation, users did not hold back from accusing the exchange of rug pull despite CoinEx providing proof-of-reserves.
Bitcoin price slipped into consolidation after the end-of-the-month shenanigans in August. This rangebound movement seems to persist, as BTC saw a minor uptick to $26,451 in the late US session on Thursday.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.
Opinions expressed at FXStreet are those of the individual authors and do not necessarily represent the opinion of FXStreet or its management. FXStreet has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and omissions may occur. Any opinions, news, research, analyses, prices or other information contained on this website, by FXStreet, its employees, clients or contributors, is provided as general market commentary and does not constitute investment advice. FXStreet will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.