Despite weathering the cascade of misadventures linked to the collapse of FTX last week, Bitcoin plunged over the weekend by over 4% to tap $15,890. This weakness was reflected in Ethereum dropping roughly 6% to $1,113, with other major cryptos diving deeply into the red.
Bitcoin, the world’s largest cryptocurrency by market capitalization, has fallen 76.43% from last November’s all-time high, igniting debates as to whether the bottom is in. Whereas it is hard to pinpoint bottoms, experts have noted that Bitcoin’s bottom can be inferred when all of the hidden leverage and circulating credit in the broader crypto space is wiped out, and the net leverage present in the system is skewed to the short side.
Nevertheless, PlanB – the pseudonymous creator of the S2F model, believes that Bitcoin could be on track to a huge recovery with the recent FTX-induced dip shaking off all the weak hands.
“Most BTC sold this month was bought at a higher level (on average -28% loss). The weakest hands historically (dark blue), they are gone, this is good for bitcoin,” he tweeted.
Although he failed to share his price predictions for a bottom, the pundit noted that current hodlers and buyers have the opportunity to buy reasonably, setting up a “foundation for the next bitcoin bull run (red).” Furthermore, the S2F model predicts that the price is more deviated from the actual price of bitcoin than at any time in its history, raising the prospects of bitcoin tapping $78,280.
On the other hand, “Venture Founder”, an analyst at CryptoQuant, suggested that Bitcoin could plunge to $14,300, echoing the opinions of many others who believe selling pressure is yet to abate. His analysis is based on $20,570 -which is Bitcoin’s realized price or the average cost basis at which most bitcoins were purchased.
“In the 2018 cycle, Bitcoin bottomed happened at a 30% discount to the realized price. The closest discount to realized price this cycle has been 16%, a 30% discount to realized price now would put BTC at $14.3k; we are not that far away anymore,” he tweeted on Monday.
That said, technically, traders continue to pile bids after the price managed to hold atop the $16,000 support for the 13th consecutive day, albeit snugly.
At press time, Bitcoin was trading at $15,978 after a 4.16% plunge in the past 24 hours, according to data from CoinMarketCap.