The data shows that Bitcoin can still fall to $20,000, but holding is still the magic weapon to win


Uninstall Bitcoin (Bitcoin) (At least according to its historical price movements), when the spot price starts to fall sharply after forming an all-time high, a spot position is a bad investment appeal.

The 11-year life of the flagship cryptocurrency has gone through Many bullish and bearish cycles. The BTC/USD exchange rate usually rises parabolicly. Later, as profitable traders sold the highest price, it cut their earnings by more than half. However, at the same time, traders who bought bitcoin near the local highest point suffered losses for a longer period of time.

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However, the overall historical price trend of Bitcoin is still upward.

After each bullish to bearish cycle, the cryptocurrency bottomed out and rebounded again in search of a new all-time high.

Its weekly timeline shows that prices have formed high levels that have continued to rise for several years-in November 2015 it was US$500, in June 2016 it was US$768, in June 2017 it was US$2,998, and in December 2017 it was US$19,891. It was US$41,986 in January 2021 and US$64,899 in April 2021.

In recent years, Bitcoin’s bullish and bearish cycles. Source: TradingView

PlanB is the brain behind the widely circulated Stock to Flow model. It can predict By 2024, the price of Bitcoin will reach $288,000, Referring to the cryptocurrency’s ability to return profits to patient investors in a tweet on Friday morning.Pseudonymous analyst famous None of the investors who held Bitcoin for more than four years suffered losses.

He cited the 200-week moving average curve as an invisible price bottom line that made the bullish bias in the Bitcoin market even higher during the bearish correction period. The BTC/USD exchange rate tested the aforementioned support wave on a downtrend, but then rebounded to a new high.

The transition from red to orange in the above chart indicates that Bitcoin is bullish and exhausted after its price surge in 2020-2021. Source: PlanB

This statement came about because the Bitcoin price showed Weakening bullish momentum. The BTC/USD exchange rate reached nearly 65,000 U.S. dollars in mid-April and was revised to as low as 30,000 U.S. dollars on Coinbase a month later. As of May 28, this pair of traders’ bid was close to $37,000.

At the same time, PlanB’s long-term project makes Bitcoin look like an asset that can suck capital from traditional markets. The analyst wrote earlier that he expected people to buy this cryptocurrency because of its potential scarcity-there are only 21 million bitcoins available.

“Silver, gold, [a] Negative interest rates (coming soon in Europe, Japan, the United States), countries with predatory governments (Venezuela, China, Iran, Turkey, etc.), billionaires and millionaires who hedge quantitative easing (QE), and institutional investors The discovery of the best-performing asset in recent 10 years will affect people’s search for the security of Bitcoin, Wrote PlanB in his 2019 thesisHe envisioned using cryptocurrency to have a market value of one trillion US dollars and “simulating the value of Bitcoin with scarcity.”

Bitcoin still follows the price trajectory of the inventory-to-flow model. Source: ByBt.com, PlanB

The model prompts those investors who bought bitcoin for approximately $65,000 to hold assets, even if it took them more than four years to make the investment. This only applies if Bitcoin continues to follow the price model trajectory from stock to circulation.

Based on the logarithmic graph of the same bullish model, it is expected that the BTC/USD exchange rate will fall to $20,000 or less. After drawing a Fibonacci chart between the upper and lower bands of the curve, a downside target will appear. Its maximum deviation is around US$111,590, while the lowest deviation is approximately US$17,150.

The Bitcoin oscillator and the price curve trajectory are showing signs of a bearish reversal. Source: Bybt.com

The historical significance of the logarithmic curve in predicting price troughs and troughs makes it sufficiently relevant for investors to achieve potential long and short targets.

Is it too unrealistic?

Despite the accuracy of the stock-flow model and its derivatives, it has attracted criticism for its unrealistically bullish portrayal of scarce assets. Charlie Morris, co-founder and CIO of encrypted data company ByteTree Tell CoinTelegraph In November last year, the supply of Bitcoin decreased, and increased demand does not guarantee a price increase.

Morris believes that people will still be able to sell bitcoin through the existing active supply to meet market demand.

Nico Cordeiro, chief investment officer and fund manager of Strix Leviathan, also criticized the core claim of the scarcity-based bitcoin pricing model, and pointed out that there is no evidence that the supply determines the dollar market value of currency commodities (gold, silver or bitcoin). ).

Past performance does not guarantee future results. However, with the emergence of low-yield investment safe-haven alternatives (government bonds, U.S. dollars, etc.), Bitcoin has grown in institutional circles, and it seems to attract many people to “hold” the token until further notice.

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