Bitcoin Is In a ‘Bore You to Death’ Phase, but Bottom Could Be Close, Analysts Say

BTC has been declining since reaching its all-time high in March.

Santiment said Friday’s rapid decline showed that interest from dip buyers had waned, indicating that the bottom may be near.

Bitfinex analysts said that the recession could last until early summer and the second half of the year could be quite bullish.

Crypto markets have remained in a doldrums over the past few weeks as digital assets consolidate, testing investors’ faith in whether the bull market will continue.

All attempts at a sustainable rise in the past weeks have failed; The latest example of this will be Bitcoin {{BTC}} on Friday, falling nearly 5% from $63,000 to just over $60,000 amid discouraging inflation expectations and hawkish comments from Federal Reserve policymakers.

Blockchain activity also points to low participation; Transactions on the Bitcoin network are falling off a cliff and the second largest ether {{ETH}} is spiraling into inflation.

We’ve been here before.

The current period resembles the action from April to September 2023, when Bitcoin was stuck in the $25,000 to $30,000 range for an excruciating six months. Eventually, cryptocurrencies managed to continue their multi-month rise, with BTC reaching an all-time high in March of this year.

“Bitcoin is in the process of boring you to death,” Charles Edwards, founder of crypto hedge fund Capriole Investment, said in an X post on Thursday.

He explained that this consolidation period could last from one to six months, during which time BTC will remain in the range with low volatility until market participants lose patience. Sentiment will be most negative just before the consolidation ends, he added.

“When you get tired enough of the sideways trend, common symptoms include thinking the halving is priced in, the bull market is over, and selling to buy shares at the bottom,” Edwards said. “Your symptoms and short spells will peak right before the mega rally.”

According to analytics firm Santiment, the bottom may be near.

“Traders are showing weak ‘buying the dip’ interest in Bitcoin’s recent reversal,” said Santiment, who tracked social media interactions on Friday. “Overall, the crowd’s lack of belief is a strong sign that prices are near the bottom.”

Bitfinex analysts said in a report on Friday that Bitcoin’s recent weakness occurred amid a rise in the US dollar as interest rate cut expectations weakened, and the recession could continue into early summer.

The story continues

“We expect the market to remain uncertain in a low volatility environment in the short term until QT actually subsides.” [quantitative tightening] The Federal Reserve has announced plans to reduce the pace of balance sheet flows starting next month; This will positively impact dollar liquidity, positively benefiting risky assets such as cryptocurrencies that are sensitive to the global liquidity environment.

But the dollar’s retreat from six-month highs last week following the Fed meeting and weak jobs report (coinciding with BTC’s recovery from $56,000) was a turning point in the trend, and a weaker dollar could support the next leg. crypto rally.

“We believe that BTC’s sustained strength in post-FOMC and labor market data and the recovery of intermittent lows and concurrent weakness in the dollar are a sign of a new regime that will set us up for an extremely bullish Q3 and Q4 for Bitcoin,” the authors said.