• Renowned Bitcoin analysts believe Bitcoin price has hit its bottom based on diminishing cycles theory.
  • Analysts identify key indicators that imply BTC is on the verge of bottoming out. 
  • Guggenheim's Scott Minerd still sees more Bitcoin downside, calls drop to $8,000 in the current cycle. 

Bitcoin price has been dominated by bearish sentiment recently, but the BTC trend might be nearing a turnaround. Several leading analysts in the crypto community are arguing that Bitcoin price action has developed in a more irregular manner over the years and diminishing “cycles” imply Bitcoin has bottomed out. 

Also Read: Three indicators that tell you when Bitcoin will bottom

Analysts argue Bitcoin price has bottomed out

David Russell is a leading cryptocurrency analyst and trader. Russell (@davthewave on Twitter) has evaluated Bitcoin price trend and performed technical analysis to conclude that Bitcoin price has bottomed out. 

Russell argues that Bitcoin cycles have become increasingly shorter, or are “diminishing” with a rise in maturity of the market. Therefore diminishing cycles have replaced four-year halving cycles and, based on this theory, Bitcoin price hit its bottom around $25,000. The analyst has used three technical indicators and models to examine whether Bitcoin price could plummet lower. Russell used the 200-week moving average and noted that Bitcoin price has consistently traded above this level. 

The 200-week moving average has acted as support ever since its appearance on the chart, and Russell believes that, given the consistent past performance of Bitcoin price, this level is likely to hold. Therefore, the popular crypto-Twitter analyst is implying that Bitcoin price will bottom around $25,000 and is less likely to drop lower. 

Bitcoin price chart, 200-week moving average in orange

Bitcoin price chart, 200-week moving average in orange 

On the basis of the Logarithmic Growth Curve (LGC), Russell argues that an 80% price drop in Bitcoin price is highly unlikely. Logarithmic analysis is a statistical approach that takes historical price data in account and develops curves to project a potential path of future price growth. 

Bitcoin LGC

Bitcoin LGC 

On-chain data shows light at the end of the tunnel 

Bitcoin Long Term Holders, or SOPR, is an indicator that reflects the degree of realized profit and loss for all coins moved on-chain. It covers a spectrum of Bitcoin with a lifespan of over 155 days. Therefore, it is considered a long-term indicator that represents an aggregate profit or loss multiple realized by long-term holders. If the value is greater than, or equal to one, it implies holders can sell Bitcoin on a neutral level or at a profit. A drop below one implies a loss. 

The current value is 0.72, which means some Bitcoin Long Term Holders could sell at a loss. Investors holding Bitcoin for three to twelve months have been known to sell their Bitcoin at a loss. Since the indicator’s value has dropped below one, it indicates a potential Bitcoin bottom formation. 

Bitcoin Long Term Holder SOPR (SMA 7)

Bitcoin Long Term Holder SOPR (SMA 7)

Institutional demand plummets

Glassnode analysts have also evaluated the Bitcoin price trend and on-chain metrics. Analysts have noted a decline in Bitcoin price performance over the past 12 months as the asset’s long term Compound Annual Growth Rate (CAGR) has taken a hit. 

The chart below plots out the rolling 4yr Compound Annual Growth Rate (CAGR) for Bitcoin. 

Bitcoin four year Compound Annual Growth Rate (CAGR)

Bitcoin four year Compound Annual Growth Rate (CAGR)

The chart shows there is a decline in institutional demand for Bitcoin, and that the general consensus is that with growing market valuation, the return profiles for BTC can generally be expected to diminish. 

Guggenheim Chief believes BTC will crash to $8,000

Scott Minerd, Chief Investment Officer at Guggenheim, is bearish on Bitcoin, predicts a downside target of $8,000 for BTC and expects the bottom to come soon as the US Federal Reserve imposes restrictive policies.

The Guggenheim notable executive has predicted a potential bottom formation in Bitcoin, calling the bottom at $8,000. This implies a 70% drop in Bitcoin price from current levels. Minerd was quoted as saying,

When you break below 30,000 [dollars] consistently, 8,000 [dollars] is the ultimate bottom, so I think we have a lot more room to the downside, especially with the Fed being restrictive.

Referring to the US Federal Reserve's interest rate hike and tightening of monetary policy, Minerd considers it likely that the Bitcoin price could hit bottom. If the Guggenheim Chief Investment Officer's Bitcoin prediction comes true, it could inflict further pain on the crypto market, which has lost $500 billion in market value over the past month. 

Minerd's previous price predictions have failed

Scott Minerd told Bloomberg in December 2020 that the Bitcoin price could rally to $400,000 according to Guggenheim's fundamental work on the asset. At the time of this prediction, Bitcoin was trading at around $20,000.

Bitcoin price increased to $40,000 within a month of Minerd's prediction, and Guggenheim stood by their target for the asset. Minerd told Bloomberg that investors had bought BTC on his recommendation. 

In February 2021, Minerd increased his target for Bitcoin price to $600,000 based on the firm's research. The Guggenheim executive argued, 

If you consider the supply of Bitcoin relative to the supply of gold in the world, and what the total value of gold is, if Bitcoin were to go to those kinds of numbers, you'd be talking about $400,000 to $600,000 per Bitcoin.

Bitcoin price then plummeted from its $63,000 high to $33,500 in July 2021, and Minerd called bottom at $10,000. Minerd's call for Bitcoin bottom has not come true in previous instances, however, this time, the prediction is accompanied by indicators that point towards a potential BTC bottom formation. 

Analysts and traders on crypto Twitter have criticized Guggenheim and their analysts for wildly inaccurate Bitcoin price predictions. 

Bitcoin bottomed out and this altcoin is ready for a 60% price rally

Crypto analysts at FXStreet remain bullish on several cryptocurrencies, and have identified a key level in Solana price. After hitting this level, the popularly known as Ethereum-killer, Solana could kick start a 60% rally in its price. If Solana price sweeps lows below $0.79, it is set to break out in an uptrend soon after. Watch the video for detailed insights. 

 


Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Price Forecast: Chances of pullback increase as miner selling ramps up

Bitcoin Price Forecast: Chances of pullback increase as miner selling ramps up

Bitcoin (BTC) price extends its decline for a second consecutive day on Wednesday, trading slightly down at around $87,600 after a 30% surge since November 5 pushed BTC to a new all-time high at $89,940.

More Bitcoin News
Crypto fraudster pleads guilty of taking part in $73 million laundering scheme

Crypto fraudster pleads guilty of taking part in $73 million laundering scheme

Daren Li, a Chinese citizen, pleaded guilty to conspiracy to help launder $73 million stolen in cryptocurrency scams. Li laundered funds using a network of shell companies and international bank accounts.

More Cryptocurrencies News
Cardano bulls show signs of exhaustion

Cardano bulls show signs of exhaustion

Cardano’s price is falling on Tuesday as it faces rejection around $0.624 and traders engaged in profit-taking following the recent rally. Technical indicators show signs of weakness in upward momentum as the RSI exits from the overbought territory.

More Cardano News
Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP could face pullbacks

Top 3 Price Prediction Bitcoin, Ethereum, Ripple: BTC, ETH and XRP could face pullbacks

Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) trade in the red on Tuesday following strong rallies since last week, driven by crypto-friendly candidate Donald Trump's election victory. 

More Cryptocurrencies News
Bitcoin: Further upside likely after hitting new all-time high

Bitcoin: Further upside likely after hitting new all-time high

Bitcoin hit a fresh high of $76,849 on Thursday as crypto-friendly candidate Donald Trump won the US presidential election. Institutional demand returned with the highest single-day inflow on Thursday since the ETFs’ launch in January.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP