If you have been keeping tabs on Bitcoin [BTC] and the crypto market at large for the last few months, chances are you are feeling a bit bitter. Unless you happen to be one of the Bitcoin critics and doom-mongers, in which case, you may be gleaming with joy.
It is difficult, especially for those new to crypto investing to avoid panicking as cryptocurrencies continue crashing. However, there are multiple reasons why you should keep calm and trust Bitcoin.
For starters, Bitcoin’s historic performance is littered with massive upticks and sharp price drops. The 2017 bull run and 2018 crash are perfect examples of the effects of crypto’s volatile performance.
The king coin’s historic performance also reflects the premise that crypto is a long game. Disappointment often awaits those looking for short-term gains. After the 2018 crash, Bitcoin took a while to recover and eventually crossed above its 2017 high in 2020. It might take more than a year for Bitcoin to rally past its current all-time high (ATH) if history is bound to repeat itself.
Identifying the bottom
It is nearly impossible to accurately time the bottom. However, there are always signs to look for when the bottom is near. Bitcoin bottoms are often characterized by increased FUD and statements, such as ‘Bitcoin is dead.’ The latter has already started popping up.
Bitcoin’s pricing model is currently flashing signs that the current bear market is approaching a bottom. Its average price of $20,281 traded below its realized price of 22,441 on 29 June. Its MVRV ratio also dropped to 0.90 on 28 June.
Source: Glassnode
The alignment of these observations in the Bitcoin pricing model has historically been followed by a significant rally not long after. Large Bitcoin acquisitions often happen near those levels.
And, one such example would be the MicroStrategy CEO Michael Saylor, who on 29 June announced that his company added 480 Bitcoin worth roughly $10 million to its portfolio.
MicroStrategy has purchased an additional 480 bitcoins for ~$10.0 million at an average price of ~$20,817 per #bitcoin. As of 6/28/22 @MicroStrategy holds ~129,699 bitcoins acquired for ~$3.98 billion at an average price of ~$30,664 per bitcoin. $MSTRhttps://t.co/leQYTXn817
— Michael Saylor⚡️ (@saylor) June 29, 2022
It is also worth noting that the 3iQ CoinShares Bitcoin ETF and Purpose Bitcoin ETF Holdings are still holding on to a substantial amount of BTC. This is after selling off a huge amount of Bitcoin earlier in June, resulting in strong selling pressure.
Source: Glassnode
The sell-off means the two ETFs are also holding on to a substantial amount of cash. The right conditions may prompt them to make a large purchase, which may end up creating a lot of bullish pressure. It is also prudent to identify risks that may trigger more downside. The same ETFs may sell off more BTC, pushing prices lower. However, that means they would sell at a loss, and that would not make much sense.
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