Because of the lawsuit filed by the Commodity Futures Buying and selling Fee (CFTC) in opposition to the world’s largest crypto trade Binance, the Bitcoin market is at the moment experiencing a excessive degree of uncertainty. After yesterday’s 5% crash inside an hour, the BTC worth is at the moment struggling to make it previous the $27,000 mark, but Bitcoin is up 63% year-to-date.
BTC Repeating The Worth Motion Of Late 2019?
Analyst @tedtalksmacro sees many parallels within the present worth development and macroeconomic setting to the interval from September to November 2019, when the Bitcoin worth consolidated between $10,500 and $6,500. “Similar to each different Bitcoin cycle, the present one has its nuances,” notes Ted, who sees the primary similarity within the US Federal Reserve’s (Fed) rate of interest coverage.
In 2019, the Fed made three charge cuts by October. It additionally started increasing its steadiness sheet in September. The situation is considerably just like immediately’s.
Presently, the Fed has already begun steadiness sheet enlargement – in response to the prevailing opinion of consultants – with its Financial institution Time period Funding Program (BTFP) and expanded swaps with 5 different central banks. Although the Fed’s dot plot doesn’t embrace any charge cuts in 2023, the market is looking it a bluff and is pricing in charge cuts of 100 foundation factors by the top of the 12 months.
Bitcoin worth developments are additionally related. In 2019, the value had hit a backside after transferring 83% away from the all-time excessive (ATH). This was round 500 days earlier than the subsequent halving in 2020.
In 2023, the value bottomed after transferring down 78% from its ATH. Like clockwork, the BTC worth once more discovered its backside round 500 days earlier than the 2024 halving.
“Consistencies between cycles are new ATHs, echo bubbles, bear markets and consolidation phases; every time these phases play out barely in another way for causes aside from worth,” defined Ted, who shared the chart beneath.
Additional, the analyst notes on the chart that the 2021/22 echo bubble was extra intense as a result of FTX collapse and subsequently outperformed the 2018 echo bubble by a a number of. As well as, Ted speculates that the COVID black swan worth motion shouldn’t repeat this cycle except one other black swan, corresponding to a 3rd world conflict, happens. In conclusion, he states:
When you’re betting on new lows from right here, it’s turning into clear that you just’re betting on this time being completely different (I’ll by no means communicate in absolutes, however betting in opposition to historical past usually doesn’t work out properly).
Similarities To 2020’s Bitcoin FUD
Famend analyst Andrew Kang takes the same view. In a latest tweet, he drew consideration to the present similarities to the 12 months 2020. The 12 months 2020 was marked by quite a few regulatory FUD historical past surrounding Bitcoin.
In October 2020, the CFTC opened its case in opposition to BitMEX and its founders. A short while later, the Chinese language authorities attacked OkEX and Huobi. After a fast restoration, markets confronted a barrage of regulatory FUD from US and Chinese language regulators, as Kang notes.
The US authorities went after Arthur Hayes and Bitmex. The Chinese language authorities went after OKX and Huobi executives. Markets couldn’t break beneath $10k and climbed the wall of fear. “Markets couldn’t break beneath $10k & climbed the wall of fear,” says Kang, who additionally wrote not too long ago:
International disaster, markets panicked, months of lengthy positioning flushed out, solely really convicted holders stay, sellers in disbelief and merchants able to fade all rallies. Similar playbook, simply 3 years later.
At press time, the Bitcoin worth was at $26,895, nonetheless struggling to shrug off the Binance information.
Featured picture from iStock, chart from TradingView.com