As Bitcoin’s price plummets to its lowest level since late February, one on-chain analyst predicts a further 16% drop to $47,000 as the next bottom for the leading cryptocurrency.
When Will Bitcoin Find Its Bottom?
CryptoQuant author Adel Axel Jr. suggested this week that $47,000 represents a 25% discount from the average purchase price of short-term Bitcoin holders. This figure is based on the average price at which all coins were moved within the past thirty days, as visible on the blockchain.
According to LookIntoBitcoin, the short-term holder realized price was $64,614 as of Wednesday.
“This will be a good resistance point and a shakeout for new buyers,” wrote Axel on X on Thursday. “Previous organic corrections in the bull market lasted between 110 to 60 days.”
The $47K level is 25% below the average purchase price for STH – this will be a good resistance point and a shakeout for new buyers.
Previous organic corrections in the bull market lasted between 110 to 60 days. pic.twitter.com/cmMo5B1pcu
— Axel Adler Jr (@AxelAdlerJr) July 4, 2024
On-chain analysis indicates that this price level often triggers capitulation among new market entrants, who frequently panic sell when their investments turn negative. Axel also highlighted the $46,300 price level – the average entrance price for buyers within the past year.
CryptoQuant data reveals that over $2.3 billion worth of coins moved on-chain on Thursday were last moved this year, while older coins saw a less significant selloff.
As of Friday, Bitcoin is trading at $56,374, reflecting a 20.73% decline over the past month.
An Overdue Pullback
Many analysts believe Bitcoin’s recent pullback was long overdue. This week marks the first time since late 2022 that Bitcoin has retreated more than 20% from its local highs, now down 23.58% from its all-time high of $73,700 in March.
In comparison, Bitcoin experienced multiple pullbacks of over 20% to 30% while continuously breaking new highs in 2017.
In March 2020, the cryptocurrency underwent a 60% correction amid Covid-19 related panic before surging almost 20X over the next 13 months.
reminder, zoom out. prior bull runs had half a dozen -30% draw downs too. we’re at about -26% (-27% earlier).
in fact if anything, recent draw-downs seem to be less deep, but people forget the normal bull market pattern. don’t panic, buy the dip. or buy a bit of $CMSTR with… pic.twitter.com/vBOjFN1TOn
— Adam Back (@adam3us) July 5, 2024
The current Bitcoin market is arguably rattled by a new type of panic: on Friday, bankrupt Bitcoin exchange Mt. Gox announced it had begun repaying customers their long-lost Bitcoin, of which 138,985 BTC ($7.52B) still remains.
However, CryptoQuant’s Axel contends that true “panic” has yet to set in, suggesting more volatility ahead.
“In the current situation, 47K doesn’t look as terrible as it did three weeks ago when we were at 70K,” he wrote on Friday. “We need more shakeout, but at a slower pace.”
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