Bitcoin Slump：What Can We Expect Next？

【TR; DR】
Bitcoin has suffered an immense slump as it entered 2022， falling through the previously thought resistance lying in the lower boundaries of the $40k region and flailing towards $30k. However， across the following week， Bitcoin has made somewhat of a miraculous recovery， diverting itself towards a weekly high of $38,137.47， signalling signs of resilience despite the oppressive bear market， which has suppressed it’s value by 45.18% since it’s all time high.

The bear market appears far from over however， as concerns are raised about the potential for Bitcoin to dip towards $30k， as it leans towards oversold territory and the potential for an ichimoku breakout rises - a bearish breakout not seen since the infamous ‘Covid Crash’ of 2020.

Yet following analysis of Bitcoin oscillators， there seems to be an absence of visible bearish continuation in the form of either a hidden or regular bullish divergence - signalling that not all hope is lost. Yet only time will tell whether the bear market will continue to rage throughout 2022 or whether Bitcoin will redeem itself in the coming weeks.


The Bears
It’s undeniable - we are amidst a significant bearish marketplace. Red candlesticks rage across the market， not exclusive to Bitcoin. However, due to its status as the head of the market，Bitcoin’s suffering has been weakened dramatically, with other assets following a similar suit. Whether investors are desperately holding onto their portfolio in the hopes that the end is nigh or panic selling at the sight of red candlesticks， the bearish sentiment remains for the time being， with little hope in sight.

Throughout the past week， the number of coin days destroyed appears volatile， opening the week at a modest 9,577,875.549 before peaking at 11,077,930.519， suggesting that investors are reluctant to sell or transact their BTC in these dismal market times. However， as BTC neared $37k territory， the number plummeted to a low of 4,638,159.441， signalling that a mass sell off was occurring， yet this metric quickly rebounded， likely as investors sought to buy BTC at a lower price and continue holding.

Following suit， the number of transactions across the past week has flailed between the upper and lower boundaries of 270,562 and 230,889， with the former marking BTC’s entry to the week in the lower regions of $36k and the latter representing it’s gradual climb towards $38k. The abstinence from transacting in the latter half of the week likely suggests that investors are prepared for another decline， whereas the former metric may signal a mass sell off from panic holders paired with an increase in BTC being moved from exchanges into cold wallets， demonstrated through a weekly peak of net exchange outflows totalling at 59,044.453.

Additionally， there is a very real threat from the ichimoku system， as BTC is testing the last oversold condition at $40k， as well as the composite indexes and historical support levels sitting at significant lows. If this was not concerning enough， the optics bands on the weekly chart demonstrate that BTC is in extreme oversold territory， which it has not entered since May of 2021. Price action wise， Bitcoin is at the precipice of potentially skidding further along a downwards trajectory， yet due to the oscillators data referenced formerly, the scope of this dip may be limited.

However， if the former does little to protect BTC from a continual plummet downwards， it could sink to dangerous territory within the upper bounds of the $20-$30k region and potentially lose volume and ichimoku support， which may lead it to crash to $20k. However， on-chain analysts are under the impression that BTC may coast towards the region of $30k after it plummeted through the former support of $40k， which now poses a heavy resistance level.


The Bulls
Many bullish investors and critics have remarked upon the recent bear market with the hopes of a reversal looming ahead in the near future. When reflecting upon data shown within the two thousand dollar three box reversal chart， there has been no retracements since it’s decline from $66k， suggesting a reversal of epic proportions may be nigh.

With each box representing a downwards trend of $2,000， BTC has fallen by 14 boxes， with no momentum rallying it upwards enough to warrant a box to signify it’s retracement. This ultimately signals that when BTC begins an inevitable price reversal it could be a strong force to be reckoned with， even if the reversal is only by 50%.

Alongside this， on-chain analyst Will Clemente has identified that for the first time since September， proportionate Bitcoin whales (holders with over 1,000 BTC each) are beginning to increase their holdings， which could present an interesting and potentially unforeseen reformation to the current market structure in the coming weeks. As whales tend to have the majority influence over significant price movements， an increase in whale accumulation may improve price stability or strengthen buying power in the current times.

Clemente believes that the current future will be ‘very interesting’ to watch as the whale balance chart continues to witness upticks.


The Verdict
Whilst the current future of Bitcoin is complex to ascertain， it can be determined that a variety of on-chain factors and external factors may play a crucial role in guiding it’s valuations within the coming weeks. It is evident that the bear market is far from over， yet a bullish sentiment lingers within the metrics and high-value whales， suggesting that retracement from its current price floor may be plausible as time goes on.


Author：Matthew W-D, Gate.io Researcher
*This article represents only the views of the researcher and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.


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