The future of Bitcoin may be bleak, with forecasts suggesting it could dip to $56,000 due to a lack of supportive factors driving its price upward. This cautionary viewpoint comes from Alex Thorn, the research lead at Galaxy Digital, who expressed his concerns in a note on Monday.
Thorn highlighted that there’s a "significant chance" Bitcoin (BTC) might slide further, potentially hitting a supply gap bottom at $70,000 before ultimately testing its realized price, which is currently pegged at $56,000. This realized price represents the average cost of all Bitcoin currently in circulation.
He elaborated that finding catalysts for price increases is proving difficult, and the narrative surrounding Bitcoin seems to be working against its favor. Specifically, it's not following the trends of traditional safe-haven assets like gold and silver, which are often sought after during times of economic uncertainty as part of what’s known as a market-wide "debasement hedge trade."
On Monday, Bitcoin experienced a 3% increase, trading just below $78,500 after recovering from a nearly nine-month low. However, it remains significantly down, approximately 39% from its all-time high of over $126,000 reached in early October, according to data from CoinGecko.
Thorn noted that historically, Bitcoin has traded below its realized price during the troughs of previous bear markets and typically finds support around or slightly beneath this level before rebounding. He pointed out that in each of the last three bull markets, Bitcoin has encountered "key support" at its 200-week moving average—its average price over that period—whenever it fell below its 50-week moving average.
Currently, Bitcoin has lost support at its 50-week moving average since November, while its 200-week moving average stands at $58,000. Thorn remarked, "Those levels have historically marked the bottom of cycles and have provided excellent entry points for long-term investors."
Moreover, Thorn observed that long-term holders have been reducing their sales, which could indicate that the bottom of the market might be approaching. However, he mentioned that there is minimal evidence of significant accumulation from large buyers and long-term holders at this time. This situation might pressure Bitcoin’s price downward, suggesting that many potential buyers might be waiting for lower prices before making their purchases.
Despite this, Thorn indicated that the trend of profit-taking among long-term holders has started to slow down considerably. Still, he cautioned that there may still be many long-term holders holding off on selling until prices rise, which could create resistance against any substantial price increases. "Nonetheless, the recent decline in realized profit-taking by long-term holders is significant and should suggest that we are nearing a market bottom," he added.
In terms of regulatory developments, the cryptocurrency sector is keeping a close eye on the US Senate as it considers a crypto market structure bill that aims to clarify how the industry will be regulated. However, Thorn noted that while the passage of such legislation "could serve as a near-term catalyst," the likelihood of it being enacted has decreased recently. The bipartisan support necessary for the bill has been challenging to secure, and momentum for advancing it through the Senate Banking Committee has stalled, with no meetings rescheduled on the agenda.
Interestingly, Thorn suggested that even if the bill were passed, any positive momentum generated might benefit altcoins more than Bitcoin itself.
This leads to bigger questions that linger in the crypto community: What would happen to Bitcoin if it faced a prolonged power outage lasting ten years? How resilient is it really? Share your thoughts in the comments below!
