Cryptocurrency News

Analyst Says Bitcoin Could See ‘A Minor Drop And A Sharp Bottom’

Cryptocurrency faithful got a Getting rid of recent market conflicts thanks for a rally in Decentralized Finance (DeFi) Token and Dogecoin (Doge) on June 2. Slight breakout in Ether price (ETH) and bitcoin (B T c) may also have boosted sentiment, but at the moment, the top-ranked digital asset is still facing pushback at key overhead resistance levels.

data from Cointelegraph Bazaar Pro and trading view This shows that the price of bitcoin rose 7.3% from a low of $35,645 on June 1 to an intraday high of $38,250 on June 2, and Ether gained a similar size of 7.7% to briefly reclaim the support level of $2,800. saw the progress.

While there are many calls for a continuation of the 2021 bull market due to the rally in prices, some analysts have highlighted the potential bearish flag formation On the bitcoin charts, the resulting price could go as low as $16,000.

The bitcoin pennant structure and its primary downside target. Source: TradingView

Market Top or Bull Market Relief?

Bitcoin’s volatile price action over the past month has led many to speculate whether the top holds for BTC or whether the current correction is merely a mid-cycle respite that will continue to propel the asset after the rally resumes. Will be ready to keep.

Deeper insight into this matter was provided in a recent Delphi Digital report that discussed the MVRV ratio, an on-chain metric that measures bitcoin’s market value (MV) versus its true value (RV) as an indicator. Measures in form that can help traders determine and determine market tops. bottoms

Bitcoin MVRV Ratio Vs Price. Source: Delphi Digital

The chart above shows that the MVRV ratio increased in early 2011, late 2013, and early 2018, “all of which represented cycle tops,” as highlighted by Delphi Digital. The researchers also suggested that “the May 2021 reading may very well indicate the apex for this cycle.”

While it is possible that the top could be for the current cycle, Delphi Digital also noted that the market is likely to see “a result similar to the ‘double bubble’ of 2013, where BTC created ATH. [all-time high], the price dropped drastically, and then significantly overtook ATH in the same year.”

The report further highlighted the fact that the threshold for determining bitcoin’s bottoms has increased over time, which could change the bull market scenario in the coming years.

According to Delphi Digital:

“Given the sharp decline in MVRV so far, it is possible that BTC could see a smaller decline and a sharper bottom than in previous cycles. This would be something like global equities, with a multi-month correction and a multi-year bull cycle. Huh. “

As a note of caution, the report noted that there is currently “a lot of conflicting data and sentiment” in the market, with “an episode of average reversal” likely in the coming weeks as the price moves far beyond its 50-day is. moving average.”

BTC Base Case: Mean Reversion. Source: Delphi Digital

“Historically, the price of BTC has been very close to its 50-day moving average. And looking at past declines, BTC has always presented a healthy relief rally followed by a deep retracement. This is a result of natural market reflexivity. “

Altcoins stage double-digit rallies

Altcoins gained double digits during the June 2 price action, which led to a 53% increase in the price of Kyber Network’s KNC token, which is now above $2.50. KAVA also gained a 37% rally and is currently trading near $4.70.

Daily cryptocurrency market performance. Source: Coin360

Dogecoin, Kusama’s KSM token and Curve DAO’s CRV token also helped lead the altcoin charge, with a nearly 25% price rally, while OKB gained 33% and traded near $17.70.

The total cryptocurrency market capitalization now stands at $1.709 trillion, with a dominance rate of 41.5% for Bitcoin.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should do your own research when making a decision.