Bitwise: Has the crypto market bottomed out?

Source: Matt Hougan, Chief Investment Officer of Bitwise; Translation: Golden Finance Claw

Over the past two weeks, my top three favorite cryptocurrency research teams (excluding Bitwise) have all written in-depth articles on the same topic: Has the crypto market bottomed out?

• Galaxy Digital: Bitcoin may not have bottomed yet. These data suggest where it might fall.

• NYDIG: What factors are dragging down Bitcoin?

• Standard Chartered: The bottom has arrived

All these articles are excellent, containing a wealth of detailed statistics and analysis. I recommend reading all of them.

But if you want a simple answer to this question, I have bad news: these three outstanding research teams disagree.

Has the crypto market bottomed out?

• Galaxy Digital: No

• NYDIG: Maybe (though unlikely)

• Standard Chartered: Yes

Let’s delve into what each statement means.

Three companies, three perspectives

Galaxy Digital

Galaxy analyzed Bitcoin’s 17-year history and found that 13 different conditions always occur simultaneously when the crypto market bottoms. These conditions include valuation, profit-taking, miner pressure, market trends, historical cycles, and market sentiment indicators. For long-term Bitcoin enthusiasts, many of these statistics are familiar, such as the 200-week moving average, the Fear and Greed Index, and the Mayer Multiple.

Galaxy found that four of these seven conditions are fully met, two are partially met, and one is not met. They conclude that Bitcoin’s bottom will be between $30k and $54k, with a “benchmark forecast” of $40k to $46k.

NYDIG

NYDIG uses a similar multi-statistic approach, comparing Bitcoin to previous cycles, and analyzing current retracements against past ones based on “drawdown duration,” holder profit/loss (referred to by Bitcoin users as “MVRV,” i.e., market value to realized value ratio), and other indicators. These metrics are close to the lows of past cycles but have not yet reached the maximum decline.

The report summarizes that the current retracement “exhibits many features of cyclical lows but shows fewer signs of the thorough collapse often seen at Bitcoin bottoms in history.” However, it notes that the current market cycle may have been fundamentally altered by institutional demand, meaning this retracement could be smaller than previous ones. If so, the bottom may already be in place.

Standard Chartered

Standard Chartered is not blindly optimistic about Bitcoin. In February this year, when Bitcoin traded at $67k, the bank lowered its year-end forecast, suggesting the price could plunge to $50k. The reason given was worsening macroeconomic conditions and concerns over ETF sell-offs.

But last Friday, the institution stated that Bitcoin had already bottomed, falling to $59k. Part of the reason was the outlook for the US-Iran agreement and the long-anticipated SpaceX IPO (the bank believes ETF holders have been selling Bitcoin to raise funds for this issuance, and selling pressure will begin to ease).

Standard Chartered now expects Bitcoin to reach $100k by the end of the year.

Common points of these three reports

You might wonder why I’m sharing three reports with different outlooks—one bullish, one neutral, one bearish. What conclusion should you draw from them?

The fact is: there are actually more commonalities among these three reports than it appears at first glance. For long-term investors, their consensus is more valuable than their disagreements:

1. They all agree that a rebound will occur this year.
2. They all believe we are closer to the bottom than the top.
3. They all expect Bitcoin to usher in a new bull market.

When I wrote this, Bitcoin was trading around $67k. One report says the bottom is at $59k, another suggests it could fall to $50k, and yet another estimates the bottom might be around $43k. But what’s important to reiterate is: all three agree that Bitcoin has bottomed.

That’s the key point. If you are a long-term investor, whether Bitcoin drops to $40k, $50k, or $60k doesn’t matter. What matters is whether it can rise to $100k, $200k, or even $1 million afterward. If it can reach any of those targets, it would be a very substantial return.

This is the irony of the current situation. We are all asking whether the bottom has already formed, but what really matters is whether the top has formed. In my view, as long as the top has not yet been reached, Bitcoin remains an excellent buying opportunity.

So, has the top arrived?

I don’t think so. The long-term drivers of Bitcoin have not disappeared; in fact, they are stronger than ever. Government debt continues to accumulate with no plans to curb it. Inflation is constantly changing the standards of wealth measurement. Trust in governments and banks is waning. The world is becoming increasingly digital. Access to Bitcoin is continually improving. The early user base of Bitcoin is aging, becoming wealthier, and gaining influence.

There are some concerning threats, including quantum risks and tightening regulations. But in my opinion, the current situation is better than any previous crypto winter.