BTC prices could quickly fall in a final capitulation. This would be similar to the 82% drop recorded in the last cycle. Shrimps continue to accumulate sats during the bear market.
The pain may not be over for cryptocurrencies yet, with one analyst predicting a final capitulation that sees Bitcoin price as low as $13,000 or even $12,500.
Bitcoin is teetering at the $20,000 psychological price level at the time of writing, having dropped another 1.3% on the day. It has remained in this range-bound channel for the past 10 days or so, but could quickly head south, according to one analyst.
Fundstrat technical strategist Mark Newton said there is a good chance of a final capitulation event before the market bottoms out.
“Most short-term technical data point to an above-average probability of a final washout-style decline before bottoming out.”
Bitcoin price has room to drop as low as $12,500 to $13,000, “which I expect to be a great place for medium-term buyers to add to longs,” he wrote, according to Bloomberg.
Capitulations in Previous Cycles
A drop in those prices would be an 82% correction from their all-time high. Bitcoin is currently down 71% from its peak, so using this as a guide might reinforce the premise.
In the previous market cycle, the price of Bitcoin reached a high of $20,000 in December 2017 before falling to $3,200 in December of the following year. This drop was 82% similar, so if history checks out, it’s plausible it could happen again. There was also a final capitulation event in November 2018 that wiped out an additional 50% in the price of Bitcoin.
The previous cycle saw BTC prices shed a similar 84% in the 2015 bear market that followed their 2014 peak.
Bitcoin prices hit a low of $17,760 on June 19 before recovering to as high as $21,600. However, the bears are still in full control of the markets. Continued selling pressure from miners could add to the downside.
Oanda Senior Market Analyst Craig Erlam commented that there is some relief given the series of negative headlines in recent months, before adding that, “I’m afraid there will be more in the coming weeks, and I wonder if the community does too, given their inability to gain traction above $20,000.”
Accumulating Sats
On-chain analytics provider Glassnode has noted that some accumulation is still taking place, especially in the smallholder group. On Twitter, Glassnode posted that, “Within the extremely challenging #Bitcoin market conditions of 2022, there are three entity cohorts with very interesting dynamics: – Shrimp < 1 $BTC are stacking; – Whales > 1k $BTC are stacking; and – Miners are distributing.”
Glassnode noted that small Bitcoin holders with less than one coin, whom they call “shrimp,” have been adding to their balance at the most aggressive rate since March 2020.
Additionally, whales with over a thousand coins are also aggressively adding to their balance, acquiring 140,000 BTC per month directly from exchanges.
By Audy Castaneda
