Beware of This Analysis: Has Bitcoin Price Peaked?

‘More pain’ marked the highly anticipated September FOMC meeting. After the FOMC, analysts explain the mid-term thesis for Bitcoin (BTC) and how to think about its upcoming macro volatility.

Maximum pain still lies ahead

The word of the day is pain. This was Federal Reserve Leader Jerome Powell’s favorite thing at the September FOMC meeting. Powell gave an easy economic explanation. He then went to the press conference. Thus, it put the market into a period of mild panic as interest rates rose, volatility warmed up, and stocks were sold in the wake of Bitcoin. The S&P 500 Index lost the critical reinforcement level of 3850. Bitcoin saw the local base levels of $ 18,100. And the 2-year Treasury interest rose above 4.1%. As you follow, even the expected 75 basis points increase was not enough to turn the markets upside down, as the supplementary information on the Fed’s claims and Powell’s speech caused more concern over risk assets. Powell has reiterated many times that more economic pain (job losses, housing market declines, etc.) comes as a result of solving the inflation problem at hand. Favorite spoke of the lack of disinflation on the ‘basic PCE’ measure. In addition, stating that they will not stop until the work is done, Jackson Hole repeated his hawk speech.

It’s now in or dead for risk assets, with options to see an immediate relief rally this week or possibly a more bearish continuation in valuations and prices in general. As long-term bullish Bitcoin advocates, our thesis is that macroeconomic headwinds are in the driver’s seat. Also, price action in the global currency and bond markets indicates that the moment of definitive panic is not yet here.

On-chain Bitcoin (BTC) analysis

On-chain circular metrics are useful for long-term expensive buy (or sell) opportunities. It also benefits to price the economic behavior of Bitcoin. However, they are less relevant to short-term price action compared to current macro headwinds. That’s why we’ve highlighted less of these in the last few months.

Looking at the history of Bitcoin market cycles and on-chain information, the consistency in the depths of the bear market where the Bitcoin price falls below the actual price is quickly noticeable. This is based on the average cost of all Bitcoins relative to their on-chain recent movement. In previous cycles, this was not a one-time event. It was more of an event that came with respite. We have been recording for months that this bear market will last longer than many expected. We also emphasize that the respite component is more painful than the percentage drop.

It is necessary to determine the BTC/USD daily parity entirely on the margin. Given the increasing macroeconomic headwinds, marginal sellers continue to dominate marginal buyers until an obvious change in liquidity conditions occurs.

A closer look shows that this long-term capitulation process is transferring cryptocurrencies to stronger and stronger hands.

Bitcoin price weighted by actual price is proof that we are in bear territory. But it shows that we still have room down there. For those who see this as the time to buy long-term low-value Bitcoin, the actual market price is a credible chart that shows Bitcoin’s daily increase in cost basis over time.

The cost base fell only a maximum of 24.07% from cycle highs. It is currently 12.71% down. This is the picture that we think many “non-Bitcoin” investors fail to grasp. Even in the “everything is speculative” bubble, of which Bitcoin is a segment, the cost basis of the network is always increasing despite daily parity volatility. However, it falls marginally. The cost base is currently only down 12.71%.

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