In brief:
- The team at Grayscale has forecasted that Bitcoin could see another five to six months of downward or sideways price movement.
- The Grayscale team cites the traditional 4-year Bitcoin and crypto cycle as their basis for the conclusion.
- The team also highlighted an increase in the number of wallets holding 0.001 – 0.01 BTC, 0.01 – 0.1 BTC, and 0.1 – 1 BTC.
A team of analysts from Grayscale has released a report analyzing the ongoing Bitcoin and crypto bear market.
Bitcoin Might See Another 5 – 6 Months of Downward or Sideways Price Movement.
The report begins by taking a deep dive into the popularly known Bitcoin and crypto market cycles that last four years which are usually aligned with the BTC halving event. According to the Grayscale team, the 4-year cycles take approximately 1,275 days.
They pointed out that ‘the 2012 and 2016 cycles lasted approximately 4 years, or 1,290 and 1,257 days respectively.’ In addition, from each peak value to a bottom, Bitcoin ‘took 391 days to fall 73% in 2012, and 364 days to fall 84% in 2016.’
In addition, and using a similar analysis, the current 2020 cycle is roughly 1,198 days in, with Bitcoin probably having another five to six months to find a possible bottom. They explained:
In the current 2020 cycle, we are 1,198 days in as of July 12, 2022, which could represent another approximate four months left in this cycle until the Realized Price crosses back above the Market Price.
Bitcoin is 222 days off the all-time high, which means we may see another 5-6 months of downward or sideways price movement.
Market Bottoms Seem to Appear One Month Earlier With Each Cycle.
Furthermore, the Grayscale team observed that with each market cycle, a Bitocin and crypto bottom tended to arrive one month earlier than expected.
Bitcoin Wallets Holding 0.001 – 0.01 BTC, 0.01 – 0.1 BTC, and 0.1 – 1 BTC Have Increased.
Concerning on-chain data, the Grayscale team noted an increment in Bitcoin addresses holding 0.001 to 1 BTC. They explained that a rise in the number of such addresses resulted from investors taking the bear market as a signal to accumulate more Bitcoin. They said:
Many of these [Bitcoin] outflows [from exchanges] could be due to investors taking this opportunity to increase their position sizes at a discount.
The number of wallet addresses holding .001-.01 BTC, .01-.1 BTC, and .1-1 BTC has increased sharply, reaching new all-time highs.
This marks an interesting change in market sentiment as, historically, smaller investors have decreased their positions sizes in times of uncertainty – notably in 2018 after the price of Bitcoin fell from ~$20k.
