Bitcoin may have already reached the bottom, based on a comparison with previous bear markets and on-chain data, according to analysts at Arcane Research.
In June, the crypto
reached a yearly low of $17,601, according to CoinDesk data. Bitcoin is trading at around $19,179 on Tuesday, down 1.8% over the past 24 hours.
It has been more than 340 days since bitcoin reached its all-time high of $68,990 in November, as the crypto went down more than 70% from its peak, according to CoinDesk data.
Looking back at the previous bear markets, bitcoin saw a drawdown in 2018 of up to 84%, and it took 364 days for the crypto to go from cyclical peak to bottom. In 2014, the downturn lasted 407 days, with a maximum drawdown of 85%.
The bottoms in both 2014 and 2018 were both followed by months of very low volatility, which is also seen recently, analysts at Arcane wrote in a Tuesday note. Bitcoin’s 30-day volatility on Tuesday stands at 1.9%, the lowest level since October 2020, the analysts wrote.
Bitcoin has been trading in rangebound for 120 days. In comparison, the low-volatility period in 2018 lasted for 130 days, and the 2014 range lasted for 280 days, according to the Arcane analysts.
To be sure, bitcoin was created in 2009 and still remains a rather nascent asset. The historical data may not be indicative of its future performance.
Several on-chain metrics also showed that the worst for bitcoin may have passed, according to the analysts.
The realized HODL ratio, which is measured by bitcoin’s coin age and economic weight, sits at similar levels seen at the bear market bottom in 2019, the analysts noted. Meanwhile, bitcoin’s reserve risk is at an all-time low, showing that not many long-term holders are selling their coins despite the price downturn, according to the analysts.
Furthermore, the market value to realized value, which indicates bitcoin’s market cap to its realized market cap, is below 1, which usually coincided with bear market bottoms in previous cycles.
Still, on-chain metrics provide a valuation framework centered only on bitcoin, without taking macroeconomic conditions into consideration. Investors remain worried that the Federal Reserve will continue to hike its key interest rates aggressively, as inflation remains stubbornly high.