empty
10.06.2022 03:25 PM
Is Bitcoin nearing capitulation?

The stabilization of Bitcoin near the psychologically important mark of 30,000 allows you to take a breath and speculate at what levels the cryptocurrency will capitulate. According to digital asset company Bequant, it is already on its way, as the share of anonymous wallets "in the money," that is, those of their owners who purchased a token at a price below the current one, has fallen to a multi-month low of 51%. Glassnode, referring to the decrease in the share of profitable accounts in the market capitalization to 18-25%, calls the area 20,560–23,600. After reaching it, BTCUSD quotes will collapse like a house of cards.

Dynamics of the share of anonymous Bitcoin wallets "in the money"

This image is no longer relevant

The more time passes, the more you realize that Bitcoin is a normal risky asset, the value of which depends on economic cycles. Due to the pandemic, the associated global recession, and massive monetary stimulus from the Fed and other central banks, the leader of the cryptocurrency sector has skyrocketed. However, the massive tightening of monetary policy brought it down to earth. In 2020–2021, the Fed stuffed the markets and the global economy with cheap liquidity, now it is taking it out of the system. Where else will BTCUSD go, if not downward?

If during the previous two years Bitcoin grew thanks to the thirst for profit, then this year its fans are closely following the macroeconomic statistics in the United States. It may give clues about the Fed's next steps. A pause in the process of monetary restriction will have a positive impact on the entire class of risky assets, including cryptocurrencies. Unsurprisingly, in such an environment, their association with the US Tech Index continues to strengthen.

The increased influence of the Nasdaq Composite on BTCUSD is evidenced not only by their correlation, but also by the completely different efficiency of investing in risky assets now and in the past. If buying Bitcoin at the close of the U.S. stock market and then selling it at the open made a profit of 270% in 2020, then in 2022 there would be an 8% loss. On the contrary, purchases at the opening followed by a sale at the close of the stock market two years ago would have practically not changed the deposit, while this year they would have led to its drawdown by 30%.

Bitcoin Strategies

This image is no longer relevant

Thus, during periods of "bullish" markets, the cryptocurrency grows faster than the Nasdaq Composite, during "bearish" conditions it falls more sharply than the stock index. This allows Bitcoin to be considered a riskier asset than stocks.

BTCUSD, Daily chart

This image is no longer relevant

Technically, the inability of BTCUSD to hold below the fair value at 30,200 will indicate the weakness of the bulls and will be the basis for further decline. However, I do not expect too deep drawdown and still hope that Bitcoin will be able to cling to the 24,500–25,000 convergence area. Its subsequent growth to 28,400 and 30,200 can become the basis for purchases within the framework of the formation and implementation of the parent and child patterns of the Broadening Wedge.

Marek Petkovich,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

The ECB May Cut Interest Rates Twice

The euro is showing a sharp rally against the U.S. dollar. The EUR/USD pair has already reached a three-year high and shows no signs of slowing down. Meanwhile, according

Jakub Novak 12:42 2025-04-11 UTC+2

AUD/USD. Analysis and Forecast

The AUD/USD pair is attempting to attract buyers in its rebound from the psychological level of 0.5900, marking its lowest point since March 2020. The upward momentum has managed

Irina Yanina 12:39 2025-04-11 UTC+2

Markets Face a Prolonged Period of Instability (USD/JPY and USD/CHF Likely to Continue Falling)

On Thursday, investors realized there is currently no such thing as stability. High market volatility remains and will continue to dominate for some time. The ongoing cause of this remains

Pati Gani 09:11 2025-04-11 UTC+2

The Market Has Grown Used to Chaos

What is life if not a game? In past years, investors focused on the standoff between the Federal Reserve and financial markets. But in 2025, the rules of the game

Marek Petkovich 08:42 2025-04-11 UTC+2

What to Pay Attention to on April 11? A Breakdown of Fundamental Events for Beginners

A relatively large number of macroeconomic events are scheduled for Friday, but none are expected to impact the market. Of course, we may see short-term reactions to individual reports

Paolo Greco 06:04 2025-04-11 UTC+2

GBP/USD Overview. April 11: The Market Didn't Believe Trump

The GBP/USD currency pair also traded higher on Thursday. As a reminder, macroeconomic and traditional fundamental factors currently have little to no influence on currency movements. The only thing that

Paolo Greco 03:28 2025-04-11 UTC+2

EUR/USD Overview. April 11: The American Comedy Continues

The EUR/USD currency pair declined sharply overnight on Wednesday but showed some recovery during the day. On Thursday, there was further growth—this series of fluctuations can only be described

Paolo Greco 03:28 2025-04-11 UTC+2

Trading Recommendations and Analysis for GBP/USD on April 11: The Dollar Takes a Double Hit

The GBP/USD currency pair also showed strong growth on Thursday, although not as strong as the EUR/USD pair. The pound gained only around 200 pips—which isn't a considerable move under

Paolo Greco 03:28 2025-04-11 UTC+2

EUR/USD. A Message from the Past: U.S. CPI Report Fails to Support the Dollar

The CPI report released on Thursday showed weaker-than-expected inflation. The market responded accordingly: the U.S. dollar came under renewed pressure (the U.S. Dollar Index fell into the 100.00 range)

Irina Manzenko 00:47 2025-04-11 UTC+2

The Euro Charges Ahead. Opponents Retreat

A rally in European stock indices, slowing U.S. inflation, and the fact that the average U.S. tariff has not changed significantly despite the 90-day deferral all contributed to the rise

Marek Petkovich 00:47 2025-04-11 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.