The volatility in Bitcoin’s price trajectory indicates a precarious stance, and according to a recent ARK Invest report, short-term Bitcoin investors were compelled to surrender in August. This came in response to a 14-percentage-point decline in the portion of Bitcoin supply in profit.
While numerous traders typically perceive substantial price declines as attractive buying opportunities, the current phase in Bitcoin’s BTC market cycle has witnessed a noteworthy bearish development. Specifically, Bitcoin’s price has dipped below its 200-week moving average (MA) for the first time since June 2023.
Illustrated in the chart below, the 200-week MA traditionally serves as a crucial support level during significant downtrends. ARK Invest has put forward the notion that should any forthcoming bearish triggers come into play, it could potentially push the BTC price down to around $20,300, aligning with its present realized price level.
Even though the short-term prospects for the cryptocurrency market may seem gloomy, a brighter perspective on Bitcoin’s descent below the 200-week MA underscores the cyclical buying opportunities it presents when compared to the realized price and long-term moving averages. Investors who seized the chance to accumulate during similar instances in 2019, 2020, and early 2022 found themselves reaping substantial profits within the subsequent six months.
Analyst Ben Lilly recently hinted at a parallel trend within the Bitcoin dominance metric, hinting that “Bitcoin is poised to regain its dominant position once more.”
When analyzing the sentiment among market participants between 2018-2019 and the present, Lilly drew parallels and suggested that the current price action reminds him of the period before a reversal in 2019. He likened it to a time when “we were in a winter, everybody had low energy, and nobody was particularly interested in Bitcoin or cryptocurrencies.”
The market cap data of stablecoins also underscores the absence of bullish investor sentiment. ARK Invest pointed out that “the 90-day supply of aggregate stablecoins has decreased by over 20%, falling from $162 billion in March 2022 to $120 billion today.” This reduction in market liquidity is indicative of a decline in investor confidence in engaging with both Bitcoin and altcoins.
Clearly, the spotlight is firmly on spot Bitcoin exchange-traded funds (ETFs) for both retail and institutional investors. These dynamics are expected to persist until either an ETF is approved or the narrative surrounding the upcoming Bitcoin halving overshadows the belief that ETF approval will trigger a bull market.