Historical data on the behavior of Bitcoin (BTC) can be put to the test in the coming hours if prices continue to approach breaking below the $20K level. It is about the fact that, since bitcoin started circulating in 2009, its price has never dropped below the all-time high of the previous halving. Halving is an event programmed into the Bitcoin blockchain that, every four years, cuts the reward generated per mined block in half, decreasing the issuance of new coins on the market. The last bitcoin halving took place in May 2020, and the all-time high in the pre-halving cycle was $19,783, recorded on December 17, 2017, according to data from the CoinDesk Bitcoin Price Index. This quote marked the apex of that bullish cycle and, after the market correction in the following years, the price rose again to a new record at the end of 2020 — just months after the May halving of that year. With the big devaluation of bitcoin in 2022, the price of the asset returned to the level of the end of 2020, dropping briefly to $ 20,950 on Monday night (13), before recovering to the $ 22,630 recorded on Tuesday. thursday (14th). But will $19,783 be able to stand as a historic support for bitcoin’s current bear cycle? Three Brazilian experts gave their opinion to the Bitcoin Portal and agree that while this price thesis has worked in the past, it may not be enough to prevent a more serious drop in the near future. “This thesis has always made sense in terms of history, but it may not be repeated now. We’re very close to the previous top, it’s clearly a support, but I don’t think it’s that hard to break this time,” said Carlos Lain, developer and creator of PagCripto exchange. In his view, bitcoin could drop below $19,700 in this current cycle. The projection is also shared by Nox Bitcoin trader Lucas Bassotto, who points out the current macroeconomic scenario as an obstacle for the bitcoin price to replicate historical behavior. “The problem is that bitcoin has never seen such an aggressive increase in interest rates in the US and around the world. This is the first time. There is a challenge in this cycle that what happened in the past may not be repeated, because the economic situation has completely changed. Bitcoin from 2010 to 2021 was operating in a low interest market, and now interest rates are going up,” he explained. The trader ventures an analysis that bitcoin could drop as low as $14,000 if inflation continues to rise and the market prices the interest rate to rise, although he believes support could be around $17 at the moment. thousand and US$ 19 thousand.
What the Past Doesn’t Say About Bitcoin’s Future
Bitcoin Market data scientist Breno Brito helps to understand the idea that every time bitcoin reaches a historic milestone, be it positive, like a price record, or negative, like the biggest drop in history, there are a break in behavior that makes the patterns of the past not necessarily repeat themselves in the future. To exemplify this, he brings a technical analysis he had in the past: “I remember that in 2018 I did an analysis that everyone who bought bitcoin and held it for at least two years, came out in profit. That has already changed, now for you to hold on to it and make a profit it takes about three years or so”. He claims that the all-time high from the pre-halving cycle still holds strong support for bitcoin, but that the current market is fundamentally different. “Not necessarily because it is a support means that it will be maintained, it may be that it breaks, since we have several small bubbles of events: there was Luna that broke, more recently Celsius that gave a problem, and the bullish scenario of interest in the US – which affects exchanges and institutions that trade bitcoin in a similar way to a technology action, as a very risky asset”, explains Brito.
a different market
According to the analyst, in the short term, volatility does not follow the fundamentals of the cryptocurrency, but the market flows, supply and demand, changes in interest rates and geopolitical fears. In this scenario, those who have more money have more weight in the market and can form patterns that contradict historical trends: “A large investor, for example, who has a lot of money invested in bitcoin and believes that this is a speculative asset that will be harmed in the current world stage, and decides it needs to sell quickly, ends up generating a self-fulfilling prophecy. The moment he sells the millions and millions of bitcoin he has, he will force the asset down”, exemplifies Brito. Another factor with a strong impact on the price of bitcoin, which did not have the same weight in past cycles, is the structure of derivatives and leveraged positions, in which a liquidation spiral can form. In any case, the bearish scenario does not mean that more traditional investors are abandoning bitcoin, but rather reducing their exposure to “risk” assets. “Institutional investors have not taken bitcoin and ether out of the portfolio. They maintain, but reduce exposure, as well as shares of technology companies, as a way of reducing risk”, analyzes Lucas Bassotto. He adds that it is natural to have a rebalancing in positions in times of high and low prices, but that the fall of bitcoin can be seen as a favorable moment for accumulation by some market players. “I feel like they’re coming back to buy. In the OTC market, on Monday I saw the highest demand in months. There are still a lot of people wanting to buy bitcoin,” he says.