Has Bitcoin Finally Reached A Bottom?

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Last Updated June 24th 2022
5 Min Read

Learn what’s happening with Bitcoin to make an informed investment choice.

June 2022 has seen a second crypto crash in the trading year to date. Back in May, the collapse of Terra Luna wiped $500 billion from the crypto market. So far, in June 2022, nearly $400 billion has left crypto as the industry market cap fell below $1 trillion for the first time since January 2021.

Many crypto investors may have thought that May 12 was the right time to buy the dip. Back then, the Bitcoin price has fallen from $40,000 to $28,000. But if you’d bought at $28,000, you’d be 30% down in your investment as the Bitcoin price barely holds above $21,000 today. In fact, it is down more than 60% from its all-time high of $69,000 in November. 

So has Bitcoin reached a bottom? Read on to find out. 

Why is Bitcoin and The Larger the Crypto Market Crashing? 

While the first crypto crash was arguably caused by the de-pegging of UST from its $1 price, this second crypto crash is largely macroeconomic.

The Consumer Price Index (CPI) put inflation at 8.6% in May following a report last week. This alarmed all markets, with the Dow Jones Industrial Average falling 900 points and the S&P500 entering a bear market. The Nasdaq composite also fell 4.68% due to inflation being at its highest since 1981.

Monday, June 13, saw the Bitcoin price collapse from $27,000 to $22,000. As a knock-on effect of falling crypto prices, lending and staking network Celsius froze over $11 billion in assets recently. Soon after, the United States’ largest crypto trading platform, Coinbase, announced it was laying off 18% of its full-time staff.

The bearish crypto news combined with bearish market conditions is why crypto is crashing in June 2022. 

Edward Moya, a senior market analyst at OANDA, said the latest crypto market crash was spurred by a de-risking Wall Street moment as many investors are feeling pessimistic about the economy amid surging inflation, a shaky stock market, and rising interest rates. The crypto market has increasingly tracked the stock market in recent months, making it even more intertwined with global economic factors.

In addition to macroeconomic factors, Moya says investors fear that problems at major crypto players could unleash a wider market shakeout.

What Is Happening with Bitcoin? 

After slumping to an intraday low of $19,764, Bitcoin has climbed back above $20,000 just a couple of days back. The largest cryptocurrency by market capitalization is now trading at $21,115 at the time of writing.

The $20,000 price point remains pivotal as analysts debate whether bitcoin (BTC) will see further declines akin to 2013 when BTC fell by 85%, and 2017, when it tumbled by 84%. If Bitcoin experiences a similar fall this time, it could see prices drop close to $10,000. However, this seems unlikely to take place.

Will Clemente, a cryptocurrency expert, believes Bitcoin is currently selling below its 200-week moving average (WMA) and appears depressed. There was a similar process at the time of the March 2020 liquidity crisis. Furthermore, for the first time since the March 2020 liquidity crisis, Bitcoin has the cheapest manufacturing cost. 

In fact, Bitcoin futures open interest has dropped to its lowest level since December 2020. It comes after previous liquidations that knocked Bitcoin’s price under $20,000. Clemente recommended purchasing a few spot BTC for his long-term investments at these levels.

Conversely, famous analyst Rekt Capital claimed that Bitcoin’s monthly RSI is creating its very first bottom, which would result in a macro-bullish split in present areas. Furthermore, he also instructed his supporters to watch for a giant sell candle with tremendous volume, which will indicate a drop. The price of Bitcoin is expected to rebound from this range.

Trading indicators are arguably positive for Bitcoin.

The Bitcoin relative strength index (RSI) over a 14-week view was recently recorded at 26. This is the lowest RSI since at least 2018 and indicates the crypto is oversold at present. It has also fallen past its 200-week SMA, which is $22,350.

Both of these key indicators suggest Bitcoin is an attractive buy right now. However, please note that it is much too early to talk about a bottom or any recovery.  

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Crypto asset investing is highly volatile and unregulated in some EU countries. No consumer protection. Tax on profits may apply.

Bottom Line 

Bitcoin has only been above $45,000 for a few short stretches over the past six months and hasn’t been above $50,000 since Dec. 25, 2021. Amid the ups and downs, Bitcoin’s current price is far from the last all-time high in November, when it went over $68,000. But even with the recent decline in price, it is still more than twice as valuable as it was just a couple of years ago. For Bitcoin, these kinds of ups and downs are nothing new.

Despite the volatility and recent slumping price, many experts still say the crypto is on its way to passing the $100,000 mark, though with varying opinions on exactly when that will happen. And a recent study by Deutsche Bank found that about a quarter of investors believe BTC prices will be over $110,000 in five years.

The volatility is nothing new and is a big reason experts say new crypto investors should be extremely cautious when allocating part of their portfolio to cryptocurrency. Bitcoin has shown a steady rise in value over the years as any other cryptocurrency on the market. It is only reasonable for investors to be curious whether Bitcoin has reached a bottom and how high it can ultimately go. 

Remember to perform thorough research before investing in BTC or any digital asset. 

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