Why Bitcoin has not yet reached the bottom. Causes and prospects

Experts told why the price of the first cryptocurrency may continue to decline, and described possible scenarios for its movement

Bitcoin is trading well below the historical highs that were reached in 2021. Then the cryptocurrency exchange rate rose to $ 69 thousand, but since then it has fallen by 70%.

On June 18, BTC dropped to a minimum this year at $17.6 thousand. By August 13, bitcoin had risen to $25 thousand, but could not stay at this level. As of August 23, 17:00 Moscow time, the first cryptocurrency is trading at about $21.4 thousand.

Experts named the reasons why the rate of the first cryptocurrency may show a further decline, and described possible scenarios of movement.

Why Bitcoin Hasn’t Hit Bottom Yet

In the coming weeks and months, bitcoin is able to set new anti-records, according to Chen Limin, financial director and head of the ICB Fund’s trading operations department. He said that according to Grayscale calculations, it took 250 days on average to end the bearish phase in the past, that is, the dominance of sales in the market may last for several more months.

According to the expert, such forecasts are confirmed by the fact that cryptocurrencies remain highly sensitive to sentiment in the US stock market, which is likely to continue to decline under the pressure of tightening Fed policy. In September, the US regulator is ready to raise the key rate by 50-75 bps, after that it may go for two more increases of 0.25% in November and December, Limin says.

He noted that the markets would like to see the beginning of policy easing in the coming spring, but the Fed is not ready for such a step because of the risks of fixing inflation at an elevated level. The signal to follow such a line can be given by the head of the Federal Reserve Jerome Powell on August 26 at the conference of central bankers in Jackson Hole — the event can become a catalyst for a new wave of sales, the expert warned.

He suggested that in such a scenario, it is likely that bitcoin will return to the June minimum ($ 17.6 thousand) and its price will continue to move down. Sales of speculators who purchased coins at drawdowns of $ 20 thousand, as well as some investors who succumbed to panic, can push the rate to $ 12 thousand, Limin concluded.

Viktor Pershikov, a leading analyst at 8848 Invest, agreed with him. In his opinion, the growth of the crypto market may begin at the end of the third quarter of 2022, but before that the final wave of decline is likely. According to him, at current levels, the number of institutional purchases is extremely small, the margin positions of retail players are also low, and this does not allow the price to rise sharply in two or three sessions.

The technical picture suggests that we can expect another update of the minimums for BTC and other crypto assets in the next couple of weeks, Pershikov believes. He suggested that this decline has a chance to become the final one this year.