Bitcoin Crash or Rise Coming? Here’s the Realistic Forecast!

Bitcoin (BTC) rise or fall? What’s really going on with the BTC price? According to crypto analyst Big Smokey, the data shows that BTC has finally formed a bottom. But is it time to buy? We have prepared the analyst’s assessments and assumptions for our readers.

“I wouldn’t be surprised if Bitcoin returns to the lower end of $21,000”

Since March 2022, traders and analysts have been claiming a policy change or pivot from the Fed. Such a move would seem to prove that the Fed’s only current option is to sink into oblivion, further reducing the value of the dollar and glorifying Bitcoin (BTC) as the world’s future reserve asset and sure-fire storehouse. As you can follow, on November 2, the Fed increased interest rates by 75 bps, in line with expectations. Subsequently, stocks and cryptocurrencies rallied as they often do. However, this time something went wrong. Prior to the Federal Open Market Committee (FOMC) meeting, there were several unconfirmed leaks indicating that the Fed and the White House were considering a ‘policy axis’.

Commenting on the FOMC’s comments and during Jerome Powell’s press conference, Powell said that the Fed is aware of and is watching how politics affect markets. He also stressed that the Fed accepted the delay in interest rate hikes and took it into account. The Fed said:

A properly restrictive monetary policy stance is required to return inflation to 2% over time. The Panel will consider the cumulative tightening of monetary policy, delays in monetary policy influencing economic activity and inflation, and economic and financial developments when determining the pace of future increases in the objective range.

Sounds a bit pivot-y, right? The crypto market was about to think. Shortly after Powell made his live comments, Bitcoin, altcoins and stocks pulled back short single digit profits. The shock here is not that the BTC price retreated before the FOMC meeting, rallied after the forecast hike was announced, and then pulled back before the stock market closed. This is expected. However, I wouldn’t be surprised if BTC returns to the lower end of $21,000 as $20,000 solidifies as reinforcements.

How should I get the situation?

What was surprising was that there was some measure of pivot language and the markets did not react accordingly. Let this be a lesson in buying narratives too deeply. I think dealing with FOMC, Consumer Price Index (CPI) and interest rate hikes is not the right way. Of course, if you’re a day trader, have deep pockets to take advantage of those 2% or 4% moves, or are a seasoned, skilled professional trader, then that’s fine. But, as in the chart below from Jarvis Labs, trading FOMC and CPI can really tear investors apart.

BTC price action before and after FOMC events / Source: Jarvis Labs

If your reason is to stay in Bitcoin for a long time and increase the stack, I think daily price movements from Bitcoin are worthless in a shorter time frame than daily. Instead of focusing on micro-events such as how the Fed continues to increase rates until inflation drops to its 2% goal, let’s look at other metrics that value Bitcoin’s current market structure and projected performance.

On-chain data shows it’s time to pile up for Bitcoin

Charles Edwards, founder of Capriole Investments, has launched a new on-chain metric called Bitcoin Yardstick. According to Edwards, the metric “normalized (divided) the Bitcoin Market-Cap/Hash-Rate and the 2-year average” essentially takes the “price-related ratio of the power work done to secure the Bitcoin network.”

Bitcoin Yardstick  metric / Source: Glassnode and Capriole Investments

Edwards explains that “lower information = cheaper BTC = more value.” “We are seeing unheard-of valuations today, like when Bitcoin was at $4-6k,” he says. Similar to Glassnode’s latest report, Edwards says long-term holders are self-absorbed. After quoting the chart above, Edwards says:

Net unrealized profit and loss (NUPL) shows a purge of long-term holders. We entered the capitulation zone (red), which in the past was only seen once every 4 years.

We also discussed this issue in last week’s Bitcoin on-chain update. On-chain metrics are at their lowest in several years. There is currently sufficient precedent to suggest that the upside profits far outweigh the downside potential.

Is Bitcoin’s MACD histogram bullish?

Another metric that is causing a buzz around traders is the moving average convergence divergence (MACD). Throughout the week, multiple traders noted a convergence between the signal limit and the mid-MACD. He also noted that the histogram turns ‘green’ in the weekly time frame. To them, they were heartbreaking signs that Bitcoin was in the process of hitting bottom.

BTC 1-week MACD / Source: TradingView

The indicator is intended to be interpreted as an isolated pure signal. However, the histogram turning from red to green, as well as the shifts on the weekly and monthly timeframes were mostly accompanied by a steady rise in bullish momentum.

The data do not confirm whether a market floor is indeed in. However, comparing current data with previous market cycles and Bitcoin’s price action shows that BTC is undervalued in its current range. It is possible that BTC is seeing a bottom. But that doesn’t rule out the possibility of a sale that would catalyze a fast wick to yearly low.

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