Data Suggests Bitcoin Hasn’t Bottomed Out; Ether and Other Altcoins Fall in Monday Trading 

According to a recent report from South Korea-based Crypto Quant, a number of price valuation metrics show bitcoin falling to as low as $14,500 to $10,000.

Monday’s trading was a tale of two cryptocurrencies. 

A day before the release of the latest US inflation reading and three days before the launch of the Merge, bitcoin rose but ether fell. 

BTC was recently trading at around $22,200, up nearly 2% in the last 24 hours. Early Monday, the largest cryptocurrency by market value surpassed $22,000 as investors’ appetite for riskier investments returned. 

Ether recently fell more than 2% from the previous day to trade just below $1,700 after briefly exceeding this level late Sunday. Investors are keeping an eye on Thursday’s expected Merge, a technological overhaul of the Ethereum blockchain that will transition its protocol from proof-of-work to more energy-efficient proof-of-stake. 

In an email, Oanda Senior Market Analyst Edward Moya attributed the divergence of the two cryptocurrencies to some traders’ “sell the event” reaction. “It appears that some of Ethereum’s profit-taking is benefiting Bitcoin and other blockchain crypto bets like Cardano, Solana, and Polkadot,” Moya said. 

“Many are still skeptical of a September crypto rebound,” Moya added, “but if price action does not turn south here, momentum traders could trigger a decent move higher.” 
Most other major cryptocurrencies were recently in the red, with ADA and CRO both down more than 3% in the last 24 hours, but SOL was up more than 3%. 
Earlier gains in cryptos tracked those in equity markets, which extended a mini winning streak with the tech-heavy Nasdaq, S & amp; P 500, and Dow Jones Industrial Average all rising more than 1%. Investors are becoming more optimistic about the possibility of a positive Consumer Price Index (CPI) on Tuesday, indicating that inflation’s momentum is continuing to wane. The consensus forecast is for the CPI to be equal to or lower than the 8.5% figure from July. Other indicators, such as job growth, have remained strong, indicating that the economy will achieve the hoped-for soft landing by the US Federal Reserve. Asset markets may be reacting positively to Ukraine’s successful counteroffensive in its war with Russia as well as the prospect of slowing macroeconomic activity. 

“The start of the trading week was supposed to be all about the August inflation report,” Moya wrote, “but Kyiv’s sudden momentum has many hoping that this moment is a turning point in the war against Russia,” though he warned that “Russia’s strategy may now shift to attacking civilian infrastructure, which could lead to widespread blackouts and slow the current counteroffensive moves.” 

According to people familiar with the situation, financial services giant Fidelity is considering whether to allow individual brokerage customers to trade bitcoin (BTC). The move would be the latest sign that traditional financial services companies are becoming more interested in the cryptocurrency space. 

A cryptocurrency exchange called Huobi said earlier in the day that it would remove seven tokens from its site. 

In an interview with CoinDesk’s First Mover TV program, the head economist of decentralized protocols at software company ConsenSys stated that cryptocurrencies, like other riskier assets, respond to external events. “The story about the macroeconomic environment is that if it allows consumers to have a larger budget-and certainly the COVID environment did-they’re more likely to take risks, use Web3 and try new protocols,” he explained. And if they’re squeezed and they’re more concerned with paying off their mortgages or rent, they’ll have a less discretionary budget. As a result, crypto prices will suffer in the short term.”

Insights

Could Bitcoin Fall Once More? 

Bitcoin’s value fluctuates. It’s a risk asset one day and an inflation hedge the next. 
A surge on Monday sent bitcoin above $22,000 for the first time in more than three weeks, after the largest cryptocurrency by market capitalization had been comfortably above $21,000 for the previous three days. 

However, according to a recent report from South Korean-based CryptoQuant, bitcoin will bottom out between $10,000 and $14,500. 

Historically, CryptoQuant writes, “the market has confirmed reaching a bottom when the price has touched the delta price, as in the 2015 and 2018 bear markets.” 
CryptoQuant also mentions exchange-flow valuation models as possible indicators of where bitcoin will bottom out. 

The Whale Exchange Inflow Price, developed by Crypto Quant’s research team, is one of them. This metric, which it claims to have signaled the bottom in 2013 and 2018, measures the price at which bitcoin whales (those with 1,000–10,000 bitcoins) have sent bitcoin to exchanges. Crypto Quant currently values this at $10,335. 

Finally, there’s the Miner’s Exchange Inflow Price, which currently stands at $14,214. (very close to the delta price). It is, as the name suggests, the price at which miners send bitcoin to exchanges. According to Cryptoquant, this metric signaled the end of the COVID-19-induced panic sell in March 2020, as well as the end of the 2015 bear market. 
An old story 

CoinTelegraph compiled a list of some of the worst bitcoin price predictions for late 2020. Sure, there were a lot of educated guesses, but there were also serious attempts to create predictive models. 

Because of its lack of correlation with equity markets and its movements in tandem with the price of gold, Nexo co-founder Antoni Trenchev predicted that bitcoin would end 2020 at $50,000. 

Ross Ulbricht, who started the Silk Road dark web market, said that March 2020’s volatility would lead to a bear market that would last a whole year. 

The “quantum model” of Twitter analyst CryptoWhale, which “effectively predicted every major move since 2018,” predicted a bull run after March 2020 that would reach $24,000 by mid-2022. 
The stock market, ironically, is now the best predictor of bitcoin’s price. Even though maximalist bitcoin supporters may find it ironic, the world’s largest digital asset will not be able to get away from the story that it is linked to stocks until there are major changes in the economy as a whole. 
Bitcoin price prediction is not a new concept, but there has yet to be a reliable model or method for doing so. Analysts said that the price of bitcoin would stay between $40,000 and $60,000 at the beginning of this year, based on macroeconomic factors. 

“We predict that stubbornly high inflation numbers combined with a continuation of negative real interest rates will be the catalyst for this move,” Gavin Smith, CEO of Panxora, told CoinDesk in January. 

High inflation rates are undoubtedly present, but a $40K bitcoin is not. Despite the fact that bitcoin opened the Asia Tuesday trading day at around $22,100, we still have a long way to go-despite some macro indicators indicating that we should be somewhere else.