According to an analysis by CryptoQuant, Bitcoin (BTC) may not be cheap enough for a macro price floor.
In a Dec. 29 blog post, a contributor to the on-chain analytics platform pointed to a BTC price indicator set to continue falling.
The key cross is missing from the profitability indicator
At nearly 80% below all-time highs, BTC/USD is nearing the zone where it bottomed during previous bear markets.
As CryptoQuant’s MAC_D notes, there is no shortage of tools to suggest that the bottom of the 2022 bear market is already forming.
Despite this, the signs are not yet consistent, and he warns that even cheaper BTC prices could materialize on profit-and-loss trades.
CryptoQuant’s Unspent Transactions (UTXOs) indicator in the Profit and Loss Indicator currently shows around 30% of transactions executed at a loss.
“As the UTXOs were breached in the profit and loss indicators, the bottom was formed during the last three BTC halvings,” explains MAC_D.
Currently, however, this indicator does not show a cross and does not show that BTC is undervalued.”
An accompanying chart shows previous crosses that occurred infrequently – in June 2016 and May 2020. The latter came after COVID-19’s cross-market crash in March of this year and also coincided with Bitcoin’s recent block subsidy halving event.
“It will provide clear buy timing when the cross is generated,” concluded MAC_D.
“Hence, BTC is likely to continue falling and spot hedging and downtrend trading is required.” Annotated BTC/USD chart with UTXO data (screenshot). Source: CryptoQuant
Max pain is still coming, say dealers
CryptoQuant is far from alone in raising concerns that BTC price action could get worse before it gets better.
Related: Low Bitcoin volume triggers BTC price alert as metric hits “value zone”.
Various theories among popular traders call for a much deeper bear market bottom than current spot prices, which may be $10,000 or below.
As a potential silver lining, Q1 2023 should mark the start of a recovery, with $22,000 even acting as a magnet for bulls later.
BTC/USD is trading below $16,500 as of this writing, data from Cointelegraph Markets Pro and TradingView shows, after hitting its lowest level in over a week before the start of Wall Street’s last trading session of the year.
BTC/USD 1 Hour Candlestick Chart (Bitstamp). Source: TradingView
The views, thoughts, and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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