- Bitcoin may be down, but history says there could be worse to come
- Price has been flatlining in the $19,000 region, leading many to say the bottom is in
- However, we are still some 15% away from the typical final bear market bill
Bitcoin has taken one of its usual dives following a bull market, so far losing 74% of its value from the top in November 2021. Many believe that the wick down to $17,600 following the Terra and Three Arrows Capital debacle acted as the final capitulation, and that we are currently in an accumulation phase. However, how does this assumption fit with history? And if we’re not done, where could we go?
$19,000 Holding…For Now
Bitcoin’s fall from $69,000 in November to the current bottom of $17,600 represents a 74% drop in price over a period of 11 months. The region of $19,000, close to the the top from 2017, is acting as a baseline and has for around four months now, with price refusing to go under it for long, like a cork on a lake. This has very similar echoes to the last bear market, which saw $6,100 act as the baseline from June to November of 2018, representing a 69% drop.
The 2014-2015 bear market is a little less straightforward, but, having topped out at $1,167 in late 2013, the $325 region offered strong support from September to December of 2014, looking like that was where it would settle, representing a 72% drop.
This, theoretically, puts Bitcoin in line with other bear market bottoms…except it doesn’t, because we need to look at what happened in the tail end of those bear markets before we can confidently claim the worst is over.
Beware the Capitulation
At the very end of 2014, Bitcoin rolled over and crashed down to $153 in a capitulation candle for a total bear market drop of 87%, while in late 2018 it fell through the $6,100 support and bottomed out at $3,100, for a total bear market drop of 84%.
Can we be absolutely sure that the bottom is in then? Bitcoin’s current 69% correction is on par for the stagnation period before the capitulation, but where would such a capitulation leave us? $14,000 is a strong area of support, and would leave us with an 80% correction. This would fit in with the narrative that Bitcoin is more in demand at lower prices than in previous years, so the corrections will be bought up quicker.
Looking further down, there is also huge support at $11,500, which would represent an 83% correction. Given that the past two capitulations we’ve been discussing were around 50%, is a 43% capitulation to flush out any last hope such an inconceivable idea? It might be in isolation, but historical precedent says this is exactly what should happen, so it’s best to be prepared for history to repeat itself.
