- Davis believes the market’s focus should be on the bottom trend line that has been forming since 2017.
- Lark Davis predicts a rough July for Bitcoin.
As the crypto market downturn drags on, there are an increasing amount of calls for Bitcoin to go all the way down to $10,000. But can Bitcoin go so low? If so, how does that happen? What are the factors that would prevent further price decline for Bitcoin?
Popular crypto bull and YouTuber, Lark Davis, provided insights into these questions in his latest video. Davis said the focus shouldn’t be on whether Bitcoin would trade at $10,000. Instead, the focus should be on the bottom trend line that has been forming since 2017. He explained his reasons: This current bear market has broken most historical models.
For example, trading has never occurred under the previous all-time high before. But that’s what has happened over the last couple of weeks. Davis also said that BTC never closed weekly candles under the 200-week moving average.
Related: Crypto analyst Lark Davis thinks now is the best time to buy crypto, here’s why
Yet, that has now happened. Also, there’s never been such a rough monthly candle, with Bitcoin finishing the month down around 40 percent before it happened last month. June 2022 represents the worst monthly candle ever for bitcoin. Historical models are broken because this time is remarkably different.
Hence, he suggests that traders focus on the bottom trend line that has been forming since 2017. He said that is a more reasonable level to be looking at as a potential blowout bottom. Using that trend line as a predictive tool indicates that the lows would be around $15,000.
When the bottom is finally printed for bitcoin, the market will enter into what Davis calls “the valley of despair.” The bitcoin price will move sideways for months. Davis predicts that a lot more people will sell their bitcoin holdings during this period.
The miners and whales equation
One of the big worries most people have now is that bitcoin miners will keep selling their bitcoins. Hence, that would be a big catalyst for plummeting the price. Davis claims that even though miners have been selling, they don’t control much of the bitcoin supply. They only control around 50,000 to 60,000 Bitcoin a month.
Hence, the fear factor is not so big in Davis’ opinion. They’re selling a few thousand bitcoin a month, even though they have more. Meanwhile, bitcoin whales have added 140,000 bitcoin to their holdings in the last month, according to Davis. That’s way more than the miners have sold. Even small retail investors have added more than 36,000 bitcoin in the last month. That’s like ten times the amount of bitcoin the miners have sold. Those amounts far exceed any dumps happening by the miners. Nevertheless, Davis predicts a rough July for bitcoin mainly because of macro-economic events.
Inflation data will be released on July 13th and the Fed meeting on July 26th. But Davis believes there is a light at the end of the tunnel. For instance, commodity prices (such as Oil and wheat) have started dropping significantly.
These drops are starting to have a ripple effect. For example, the cost to ship a container from Shanghai to Los Angeles has fallen by 38 percent. That is a huge decrease in shipping costs. Davis explained that if inflation numbers fall and the fed only raises rates by 0.5 instead of 0.75 percent, a market rally is likely. However, he said the market should prepare for the opposite of the above scenario.
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