To cheer! The bear market could be over. That is the main thesis behind it The Bitcoin Monthly of July Report. “Since Bitcoin’s price has not risen parabolic during the 2021 bull market, its bear market correction may be over,” reasoned ARK. And it makes sense, the numbers seem to suggest it, and it feels like it. But are we fooling ourselves? Is ARK’s reasoning wishful thinking? Let’s examine the data and see what it tells us.
First off, “Bitcoin closed the month of July up 16.6%, rising from $19,965 to $23,325, its biggest gain since October 2021.” So far, so good. However, can we declare that the bearish correction is over? Well, “the probability of touching its delta cost base has decreased, bitcoin’s downside risk in a bear market is technically at its delta cost base, currently $13,890.” That number seems far off. Maybe bitcoin is slowly coming out of its slum.
“Bitcoin has corrected 72% from its all-time high. Although this drop is consistent with intra-cyclical corrections, like the COVID collapse in 2020, Bitcoin typically finds global cyclical bottoms with a correction of more than 80%.”
That doesn’t sound very promising. More pain may be yet to come, though… “Given the positive correlation between Bitcoin and US stocks since COVID, the fact that the US is the leading price mover of Bitcoin suggests an emerging risk market environment,” asserts ARK. Apparently the US has been leading the bulls lately. Perfect. Bitcoin needs all the help it can get during these trying times.
Are we exiting the bear market? Let’s look at the signs
- “Contagion in the crypto markets appears to be contained as Celsius and Three Arrows Capital officially file for bankruptcy.”
announcement of Celsius News, NewsBTC said, “After weeks of conjecture and hearsay, Celsius’ legal advisors have officially notified regulators that the cryptocurrency lender has filed for Chapter 11 bankruptcy protection.” the 3ACwe said, “Crypto hedge fund 3 Arrows Capital is set to be another pillar of bear market headlines in 2022, tying in with brutal bear market moments like the sinking of Terra Luna and the drama of CeFi.”
- “Leverage appears to be unraveling across the crypto ecosystem, paving a path to recovery”
This is phenomenal. May this continue to happen.
- “Having traded below its cost basis to investors for the first time since March 2020, Bitcoin has regained key support levels and is trading above its market cost basis.”
Great news. Is that real then? Can we get out of the bear market so quickly?
BTC price chart for 08/09/2022 on Kraken | Source: BTC/USD on TradingView.com
Other factors, miners and flashes
- “Despite continued pressure from miners, Bitcoin’s economics are in balance.”
Ok, some miners have sold their machines and others have rejected their machines. But the pressure seems to be easing and the sun is shining.
- “Bitcoin’s scaling solutions appear to be gaining momentum as capacity hits an all-time high on the Lightning Network.”
The Lightning Network went head to head with the bear market and didn’t even flinch. People are building and the L2 solution is bigger and better than ever. “LN’s capacity growth appears to be accelerating during bear markets, marking a shift in sentiment from exuberance and speculation to testing and building long-term solutions for Bitcoin.”
- “Given the continued slowdown in economic activity, including employment, the Federal Reserve could pivot in the second half of the year.”
Is the US in the middle of a recession? Opinions differ, but the results are the same. Fighting people around the world. “The decline was largely due to a fall in inventories, residential and non-residential investment and government spending. Strong recession signals could force the Fed to change its hawkish stance,” explains ARK.
- “The 10-year Treasury yield failed to sustain a move above 3% and is now falling, presenting less competition for crypto assets.”
Government bonds have been the safest investment for years. These days, they’re not the new kid on the block. Bitcoin is the new kid on the block. This bear market may have been little more than a “brief deviation.” Maybe we’re back in business after all.
Featured Image by Alexa from Pixabay | Charts by TradingView
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