The Bear Market Correction Could Be Over, According To ARK. Reasoning Inside
09 August 2022 - 10:16PM
NEWSBTC
Rejoice! The bear market might be over. That’s the main thesis
behind July’s “The Bitcoin Monthly” report. “Because bitcoin’s
price did not rise parabolically during the 2021 bull market, its
bear market correction could be over,” ARK reasons. And it makes
sense, the numbers seem to suggest it, and it feels like it.
However, are we fooling ourselves? Is ARK’s reasoning wishful
thinking? Let’s examine the data and see what it tells us. First of
all, “bitcoin closed the month of July up 16.6%, rising from
$19,965 to $23,325, its most significant gain since October 2021.”
So far, so good. Can we declare that the bear market correction is
over, though? Well, “the likelihood of touching its delta cost
basis has diminished, bitcoin’s downside risk in a bear market
technically stands at its delta cost basis, currently $13,890.”
This number seems far away. Maybe bitcoin is slowly getting out of
its slum. “Bitcoin has corrected 72% relative to its alltime
high. Although this drawdown is consistent with intracyclical
corrections, like the COVID collapse in 2020, bitcoin usually finds
global cyclical bottoms with a correction greater than 80%.” That
doesn’t sound as promising. Maybe there’s more pain ahead, however…
“Given the positive correlation between bitcoin and US equities
since COVID, the US being the leading price mover of bitcoin
suggests an emerging risk-on market environment,” ARK claims.
Apparently, the US has been leading the bulls lately. Perfect.
Bitcoin needs all the help it can get in these trying times. Are We
Leaving The Bear Market? Let’s Look At The Signs “Contagion in the
crypto markets appears to be contained, as Celsius and Three Arrows
Capital officially file for bankruptcy.” Announcing the Celsius
news, NewsBTC said “After weeks of conjecture and hearsay,
Celsius’s legal counsels have formally informed regulators that the
cryptocurrency lender has filed for Chapter 11 bankruptcy
protection.” Announcing the 3AC one, we said, “Crypto hedge fund 3
Arrows Capital is slated to be another pillar piece of 2022’s bear
market headlines, joining the likes of brutal bear market moments
that include Terra Luna’s downfall and CeFi’s drama.” “Leverage
appears to be unwinding across the crypto ecosystem, paving a path
to recovery” That’s phenomenal. May this continue to happen. “After
trading below its investor cost basis for the first time since
March 2020, bitcoin has reclaimed major support levels and is
trading above its market cost basis.” Great news. Is this real,
then? Are we getting out of the bear market this fast? BTC price
chart for 08/09/2022 on Kraken | Source: BTC/USD on TradingView.com
Other Factors, Miners And Lightning “Despite continued miner
pressure, bitcoin’s economics are at equilibrium.” Ok, some miners
sold and others turned down their machines. However, the pressure
seems to be subsiding and the sun seems to be shining.
“Bitcoin’s scaling solutions appear to be gaining momentum, as
capacity on the Lightning Network reaches an all-time high.” The
Lightning Network went head to head with the bear market and didn’t
even flinch. People are building and the L2 solution is bigger and
better than ever. “LN capacity growth seems to accelerate during
bear markets, marking a shift in sentiment from exuberance and
speculation to testing and building longterm solutions for
bitcoin.” “Given continued declines in economic activity, including
employment, the Federal Reserve could pivot during the second half
of the year.” Is the US in the middle of a recession? Opinions
vary, but the results are the same. People all over the world are
struggling. “The drop was attributable largely to a decrease in
inventories, residential and non-residential investments, and
government spending. Strong recession signals could compel the Fed
to change its hawkish stance,” ARK states. “The 10-year
Treasury bond yield has been unable to sustain a move above 3% and
is now falling, posing less competition to cryptoassets.”
Government bonds were the safest investment for years and years.
Nowadays, they’re not the new kid on the block anymore. Bitcoin is
the new kid on the block. This bear market might not have been more
than “brief deviation.” We might be back in business after all.
Featured Image by Alexa from Pixabay | Charts by TradingView
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