A popular cryptocurrency analyst has suggested that the pace of the flagship cryptocurrency Bitcoin ($BTC) could soon hit the bottom of the ongoing bear market after the collapse of the popular cryptocurrency trading platform FTX.
In a series of tweets shared with their over 300,000 followers on the microblogging platform, pseudonymous analyst Rekt Capital noted that previous Bitcoin bear cycles saw the collapse of a cryptocurrency trading platform before bottoming out.
Per his words, exchange contagion has “become a historical tendency that occurs close to the absolute $BTC Bear Market bottom.”
In a follow-up tweet, as first reported by Daily Hodl, Rekt Capital noted that historically Bitcoin’s price “trends to bottom 517-547 days prior to the next Halving event.” The next Halving, he added, is less than 540 days away.
Bitcoin’s block halvings are events in which the coinbase rewards associated with each block mined on the BTC network are cut in half. Miners receive coinbase rewards along with transaction fees whenever they find new blocks. Halvings occur every 210,000 blocks on the network, or roughly every four years.
Back in 2020, Bitcoin underwent a block reward halving that saw the coinbase reward drop from 12.5 BTC per block to 6.25 BTC per block. In 2024, the halving will see per-block BTC rewards drop to 3.125 coins. Halvings are significant as they are at the core of the cryptocurrency’s economic model and effectively cut the cryptocurrency’s newy minted supply in half.
Rekt Capital also added that an 80% drawdown for the flagship cryptocurrency was “bound to happen,” but noted that Russia’s invasion of Ukraine, and the collapse of Terra’s ecosystem, crypto hedge fund Three Arrow Capital, and crypto exchange FTX facilitated the retracement.
The analyst predicted Bitcoin’s price could hit a bottom of $13,900 if it fails to break through the $17,400 mark.
As CryptoGlobe reported, strategists at Wall Street giant JPMorgan have also suggested that the price of $BTC could collapse to $13,000 amid a “cascade of margin calls” triggered by the liquidity crisis at popular cryptocurrency exchange FTX.
As CryptoGlobe reported, after a leaked balance sheet of Alameda Research showed the firm’s collateral heavily relied on FTX’s FTT and Solana-based altcoins with low liquidity, crypto exchange Binance announced it was selling the FTT holdings that it had after leaving an equity investment in the exchange.
Binance’s announcement coupled with the balance sheet leak triggered a bank run on the trading platform, which revealed it was unable to cover users’ withdrawals, despite its CEO Sam Bankman-Fried saying it had users’ funds numerous times.
According to CrypotCompare’s deep dive into FTX’s insolvency, FTX saw outflows of 19,947 BTC, worth over $340 million, on November 7, the largest figure since September 10, 2021 when the exchange recorded more than 45,000 BTC outflows.
Other analysts have also pointed to the $13,000 mark as a potential low for the cryptocurrency. Notably, data has shown BTC investors are moving to buy the dip after the cryptocurrency’s price plunged from around $20,000 to $16,000.
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