Once again, fear has gripped the crypto markets, as the crash dominating headlines for purported TerraUSD stablecoin
These developments may seem doomsday to some bitcoin holders (55% of whom only started investing in the currency last year), however many industry veterans are optimistic, arguing that bitcoin is actually on the right track.
“So [the prices] we’re looking at right now, using log regressions and those kinds of models, we’re completely in line with that,” says Benjamin Cowen, host of in the cryptoverse, a popular technical crypto chart platform. “We could go back to 15k and stay in line with that.”
While Cowen (who was asking for $25,000 worth of bitcoin in January) acknowledges that technical price predictions can “go with the wind,” he has some confidence in the fact that bitcoin has seen extreme volatility several times before, and still hasn’t. has done. broken model.
“If you look at previous moves and bear markets for bitcoin, the pullbacks have been less severe each time. The first retracement was 94%. The second was, I think, about 87%. The third was 84%. So right now, from 69k to 25k, it’s a little over 60% retracement.”
“Now, if Bitcoin were to go down more than 84%, then clearly the structure of the market is completely changing,” he adds.
Cowen is not alone in his analysis. Jeffrey Ross, CEO of Vailshire Capital, described a $20,000 bitcoin as a “generational opportunity” for investors, saying his fund is a net buyer as the price of the coin declines.
“I look at things like the 200-week moving average, which is at $21,000 right now. Bitcoin in the past, when it has gotten as bad as it can get, it usually goes down and kisses that line. It may drop below, but then there would be tons of people, myself included, who would be backing the truck to buy as much as possible,” Ross said in a Zoom interview. “So I don’t think it will last long.”
Both Cowen and Ross acknowledged that this is the first time that Bitcoin has existed in an environment with quantitative restrictions by the Federal Reserve, which could prolong the rally as the market maintains a “risk-on” appetite. It’s also worth noting that bitcoin’s 13-year existence has coincided with the longest bull run in history, meaning that stationary regression models don’t necessarily hold as the macro environment changes.
However, even looking beyond the technicals, Ross pointed to the continued strength of on-chain metrics, such as bitcoin’s adoption rate (approximated by new addresses with a non-zero balance), as drivers of exponential growth in the network value.
“According to Metcalfe’s Law, correct, the value of a network is equal to the number of users squared. Just like him [bitcoin] the adoption rate grows linearly, the price or value of the network grows exponentially”.
“So like the internet, like cell phone adoption, like social media, [bitcoin] it basically follows this S-curve of adoption. That’s what I think is going to happen.”
In fact, although the bitcoin price has seen five major price resets to date, coin ownership and transaction volume during this time has continued to grow steadily. According to a report by on-chain data platform Chainalysis, global bitcoin adoption increased 881% between Q3 2020 and Q3 2021, largely driven by growth outside of the US and China. . It is estimated that currently between 16-22% of the US adult population has some exposure to bitcoin.
Meanwhile, bitcoin (and cryptocurrency in general) continues to attract the attention of US regulators, with Congress introducing 50 bills related to the regulation and taxation of digital assets. Many experts, including early bitcoin and MicroStrategy evangelists
In the short term, the bitcoin price is expected to remain choppy, with many analysts citing previous bear market durations of 12-18 months. And while trying to precisely time the bottom looks largely silly, one thing is for sure: If you believe in the long-term value of bitcoin, short-term price declines can actually be a good thing.