June closes with the price of Bitcoin at its worst monthly level since 2011, with a decrease of 37%. If the US Federal Reserve controls, the markets and the economy will resume the boom.
At the end of the first half of 2022, there is an accentuated bearish outlook in the Bitcoin (BTC) market. June closes with the highest monthly losses (37%) since 2011, while the price has dropped by 58% since January.
Despite that significant drop, analyst Scott Melker suggests some factors could intensify the crypto winter. However, he also mentions some catalysts that may help the Bitcoin market recover its bullish momentum.
In his latest market newsletter, Melker refers to the predictions of Tom Loverro, a former Coinbase director. Loverro estimates how long the crypto winter or bearish phase of the Bitcoin market will last. He states that the cryptocurrency market will continue to fall in 2022 and improve in late 2023.
According to Loverro, the transition from an all-time high to the bottom in the Bitcoin market usually takes around 12 months. The specialist explains that this pattern should also repeat itself in this opportunity, with some variations. He cites that the reigning extreme fear is one factor delaying the arrival of the price bottom. Since cryptocurrencies are not in the headlines and tourists have left the market, this process can take months.
Trader Aurélien Ohayon says this first half is among the worst for the S&P 500 index, with the high correlation between the Bitcoin market and stocks. Since the beginning of that indicator in 1877, a first semester as bad as this one has happened four times. However, after the four semesters with negative returns, the second half produced positive returns.
Some Factors That Would Contribute to Bullish Momentum
Scott Melker also mentions some catalysts that would help the current bearish momentum to change. He says that the days become shorter when the market weather is frigid, and it seems that the hot weather will never return. Therefore, he thinks it is time to consider potential catalysts to return to the bullish territory.
The analyst first refers to the US Federal Reserve (Fed) strategy to reduce inflation rates. Melker says that the market and the economy will resume an upward trend once inflation is under control. Secondly, he points out that there is a recession and a possible official announcement of the exit from it in the short term.
The results in red for two quarters in a row indicate that there is now an official recession. Besides, leading financial institutions like Deutsche Bank and Citigroup estimated the probability of a global recession at 50% within the next 12 months.
BTC is trading at around USD 20,079 and has accumulated a 1.4% loss over the last 24 hours. While its daily trading volume is above USD 20.29 billion, its market capitalization is about USD 383.29 billion, according to CoinGecko.
By Alexander Salazar