The current bear market has been quietly creeping up on the cryptocurrency industry. After six months of wandering at the top of the price range, digital assets began to drop sharply in the spring of 2022. It is clear that this happened due to a combination of fundamental factors that are not commensurate in scale with the coronavirus crisis, as well as the fall of 2018–2019. Most altcoins have fallen in price by 80%–90% and have already reached the local bottom. With Bitcoin, the situation looks much more complicated, and there is every reason to believe that the price will take the most unpredictable route.
On the one hand, the main cryptocurrency at the moment fell to the level of $17k. In this case, only 49% of BTC coins are in profit. According to the historical context, the final bottom of the bear market is formed just when the profitability of coins is between 40% and 50%. That is, de facto, the cryptocurrency has reached a range where a local bottom is formed according to one of the metrics.
In addition, the Bitcoin price chart indicator indicates the need to buy here and now. The rainbow chart, which is used for the long-term evaluation of the value of BTC, signals that the current position of the cryptocurrency is the best time to buy. To top it off, on June 20, the price of Bitcoin made an upward spurt by 8% and broke through the $20k level, although it failed to gain a foothold above. Positive signals come from the liquidation charts of traders' positions. During the last action of forced closing of positions, parity was established between the volumes of long and short positions without a clear superiority of one indicator over the other.
All these factors indicate that the price of Bitcoin is approaching the local bottom, and a massive buyback will soon begin. However, it is important to understand that the "second part" of the bear market with massive crashes was not provoked by the cyclical nature of the market, but by a number of fundamental factors that could prevent the market from recovering steadily. First of all, we are talking about the policy of the Fed and everything connected with it.
Raising the key rate and withdrawing liquidity from the markets negatively affects all investment flows, and therefore, in the current environment, not all leading crypto-oriented companies can afford to buy the bottom. Institutional investors understand that in the current economic conditions, the price for one Bitcoin in the region of $20k is not acceptable. It is for this reason that there was no strong reaction to the breakdown of this area.
Miners are also becoming important allies for the bears. In addition to the expected tightening of access to liquidity and lower yields, Bitcoin mining companies are facing a war in Ukraine. As a result of the sanctions imposed on the Russian Federation, chaos reigned in the energy markets.
Companies were urgently forced to build new supply chains, look for new sources of energy, and at the same time receive a minimum due to the bear market. As a result, miner revenues account for 39% of the maximum revenue, Bitcoin hashrate decreased by 10%, and over the past week, mining companies have sold more than 9,000 BTC coins.
All of these factors indicate that the major players in the market are chasing whatever liquidity is available and are willing to sacrifice a further recovery period. Absolutely all categories of investors suffered huge losses following the three-week fall. And as the situation in the world develops according to an unpredictable scenario, the next report on the growth of consumer prices may once again send the market in search of a new bottom.
Technically, BTC/USD is showing signs of consolidation near $20k. As we expected, the $17k–$20k zone is an active trading zone, and there is no expected drop similar to the $22k–$27k area. The active buyback of Bitcoin to the level of $19k is a clear confirmation of this. With this in mind, if there is a next stage of the fall, it will not be immediately, since a significant level of support is concentrated at $19k.
Technical metrics have been in the oversold zone for more than a week, but this did not prevent the price from making new lows. Local positive can be seen on the MACD indicator, which is becoming flat, which may mean a gradual drying up of the downward potential. However, in the current situation, little depends on the crypto market and investors, and any fundamental event can give a new impetus to the downward movement.
