3 Reasons Why Bitcoin Bottom Might Be In: ARK Invest Crypto Analyst

The price of Bitcoin has been trading in a range for quite some time, between the important levels of $18,000 and $24,000. The last few days saw a new bullish momentum where BTC managed to close its highest daily candle in about 24 days.

Now Yassine Elmandjra, cryptocurrency analyst at ARK Invest, along with Reflexivity Research co-founder Will Clemente, outline some possible reasons why the fund is already in.

Strong demeanor of the holder

Bitcoin’s short-term holder cost basis appears to have fallen below its long-term holder cost. This has only happened three times before, and according to analysts, “this cross historically marks a cyclical bottom.”

img1_btc_chart_05102
Source: Twitter

Despite the cryptocurrency trading between its investor cost base at around $19,000 and the $200 weekly moving average at $23,500, the above demonstrates a strong performance by the incumbent battling against the weak macro environment. According to Elmandjra, a “resolution for either side will play an important role in bitcoin’s short- and medium-term prospects.”

Mining capitulation

The analyst also believes that the capitulation of miners is leaning towards completion.

Hashrate’s 30-day moving average has officially crossed its 60-day moving average, breaking out of a major closing period.”

img2_btc_chart_05103
Source: Twitter

It is worth noting, however, that a recent report by the popular cryptocurrency analysis resource Glassnode indicated that the current price of BTC is dangerously close to its cost of production, which stands at around $18,300 (in time of report). The company concluded that this could spell trouble for miners and “signals a potential threshold for acute revenue stress in the mining industry.”

The above is also supported by ARK Invest’s own report, which pointed to a 55.7% decline in BTC miner revenue in a year.

Long-term supply at an all-time high

Another important metric that the analyst brought up is the supply of long-term holders. It hit an all-time high of 13.7 million BTC, representing 71.5% of the cryptocurrency’s outstanding supply. This, coupled with the fact that quarterly coin days destroyed have hit a 12-year low, is a very positive sign.

Another thing to note is the fact that the supply of BTC on exchanges is the lowest since November 2018. CryptoPotato reported yesterday, currency outflows are increasing as investors demonstrate long-term convictions in the asset.

conclusion

All of the above must be considered alongside the overall macroeconomic uncertainty. Analysts also noted that:

As the signs of a recession become clearer, the dollar appears to have entered a parabolic rally, negatively impacting all risk assets, including Bitcoin.

A strong dollar is causing turmoil at major euro banks. CDS spreads at Deutsche Bank and Credit Suisse have reached levels not seen since the ’08 financial crisis.

This is also part of the reason why foreign pressure on the US to stop raising interest rates is increasing. The UN even expressed concern that if the Federal Reserve continues to raise rates, it could lead to a global recession.

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