5 reasons why you can make the argument that 17K was the bottom, and unless we have a major black swan event in the next 60 days, the odds of seeing a lower price becomes increasingly slim.
3 min read
(60 days being an approximate timeline, based only on historic timeline highlighted below).
1-The micro economic environment.
-None of the micro economic data is as high or as bad as it was in June.
-CPI for inflation may not be dropping as quickly as Wall Street wanted, but it has still slowed from 9.1% to 8.3% in 3 months. It would have to start increasing back to those highs, before we can talk about new lows.
-GDP is growing again. It is up 1.3% for the latest September data according to the Atlanta Fed. And is on pace to be positive again. GDP is what recessions are measured with.
-Unemployment is still at a low at 3.7% (but not too dangerously low), and 2022 has the highest wage increase in decades.
-Housing and rent prices are beginning to cool off.
-The supply chain is continuing its recovery. Which means everything from oil, lumber, food and goods, will be able to resupply more quickly and bring prices down.
-Oil prices are low, and on pace to continue to dive, as demand is dropping, and China’s economy is reeling and facing lockdowns reducing demand even further. While there is a growing oil supply coming on the market, mainly due to increased output targets, OPEC members still trying to play catch up on their quotas, Libya lifting its oil blockade, and the supply chain recovering.
-The War in Ukraine has taken a u-turn, with now Russia losing territory and on the retreat.
Key take away:
None of the numbers that brought us at $17K are there anymore. Every month, we are getting further away from those numbers. And further away from a new low.
2- Every bull market becomes less intense, and as a result bear market become shorter and less intense.
Past bull markets from bottom to ATH keep getting less intense: In the 2013 cycle, it went x406. In 2017, x109. In 2021, x21.
Bear markets from ATH to bottom drop less each cycle: In 2014, Bitcoin dropped 86%. In 2018, 83%, or between 74%-76% if you remove the Hash Wars. So far, at the very bottom, Bitcoin dropped at a max of 74%.
Timeline from ATH to bottom, get shorter in duration: In the 2014 bear market, it took 405 days. In the 2018 bear market, 364 days. So far this bear market has been 308 days.
If there is another bottom, it would have to be within the next few weeks, or likely has already happened.
3- History often rhymes.
Comparison between the 2018 bottom (chart at the top), and the potential 2022 bottom.
4- The fuel for the correlation with stock markets is no longer there.
Some of you may have noticed that we’ve had days where Bitcoin is doing the opposite of what the stock market is doing. In fact, we seem to have a growing number of days like that.
That’s because the correlation to stocks hasn’t been growing since May. And has become less consistent.
Statistical correlation between S&P500 vs Bitcoin
Normally, Bitcoin has a weak correlation to stocks. We’ve only see it begun to grow after Covid.
Because of the Covid crash creating a hard reset for the Bitcoin bull market, putting it in synch with stocks, and liquidity coming in because of the Fed printers, Bitcoin has had a stronger correlation than usual to stocks.
But the monetary policy is no longer there. And sooner or later, the much more volatile Bitcoin market, will uncouple itself again, as stocks don’t have the same volatility, and the same shorter cycles.
As time goes by, it becomes increasingly more likely that Bitcoin won’t be able to stay tethered to stocks as much as it was in May and June.
5- Bitcoin hasn’t strayed from its cycles, despite the exceptional conditions thrown at it (including a pandemic and a war).
submitted by /u/fan_of_hakiksexydays
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