Analysis of previous Bitcoin bottoms suggests more pain to come

Market Analyst astatine Bitcoin Magazine, Sam Rule, tweeted a comparative illustration of Bitcoin returns implicit the past 4 important peaks. The astir caller timeline, depicting our existent situation, suggests much downside is to come.

The illustration comprises the 2011 period, which ended aft 160 days and a 93% drawdown; the 2013-2015 period, which ended aft 410 days and an 85% drawdown; and the 2017-2018 period, which ended aft 360 days, and an 83% drawdown.

The existent 2021-2022 play is 220 days in, and truthful far, down 69% from the November 2021 peak.

Source: @samjrule connected Twitter.com

Analysis of past Bitcoin drawdowns

The erstwhile percent drawdowns scope betwixt -93% and -83%, suggesting the existent “live” drawdown of -69% has much to autumn earlier reaching a bottom.

By examining the percent drops sequentially, it’s noted that each play had progressively little terrible declines. If the aforesaid signifier plays retired this time, it whitethorn effect successful an approximate -80% drawdown. This would enactment Bitcoin astatine a bottoming terms of around  $13,800.

Moreover, the signifier supra suggests BTC is becoming little volatile implicit time.

Regarding the magnitude of each drawdown period, the astir prolonged play was the 2013-2015 phase, astatine 410 days. But determination is nary discernable signifier to beryllium extracted from the data.

Remember that past lawsuit should not beryllium taken arsenic an indicator of aboriginal performance. What’s more, this method of investigation does not instrumentality into relationship the macroeconomic landscape, which is simply a origin successful the existent 2021-2022 period.

The macro picture

Mainstream media reports a mixed container arsenic acold arsenic recessionary hazard is concerned.

For example, CNBC precocious featured commentary from Simon Baptist, the Global Chief Economist astatine the Economist Intelligence Unit. Baptist plays down the hazard of an imminent recession. Instead, helium said the apt result is stagflation, characterized by rising costs combined with slowed economical growth.

Also talking to CNBC recently, Larry Davies, the erstwhile Chief Economist astatine the Securities Exchange Commission, made a lawsuit for a apt coming recession, saying it’s hard to halt ostentation [by raising involvement rates] without going into recession.

“There volition beryllium a time of reckoning, the question is however soon.”

Meanwhile, Lenore Hawkins, Managing Partner astatine Calit Advisors, said, based connected user spending, the recession whitethorn already beryllium here.

“It’s worse than we saw successful the 70s, successful the existent property situation successful the 80s, and adjacent the 9/11 violent onslaught and the fiscal situation successful 2008 – adjacent those were not arsenic pugnacious connected the user arsenic what we’re seeing today.”

A compression connected household incomes typically results successful spending behaviour prioritizing essentials. As such, request for Bitcoin, and different non-essentials, volition apt taper.

The station Analysis of erstwhile Bitcoin bottoms suggests much symptom to come appeared archetypal connected CryptoSlate.