As a result of a lawsuit filed by the Commodity Futures Trading Commission (CFTC) against the world’s largest crypto exchange Binance, the bitcoin market is currently experiencing a high level of uncertainty. After a 5% drop in an hour yesterday, BTC price is currently struggling to cross the $27,000 mark, yet bitcoin is up 63% year-to-date.
BTC Repeating Late 2019 Price Action?
Analyst @tedTalksmacro sees There are many parallels between the current price action and the macroeconomic environment for the period from September to November 2019, when the bitcoin price consolidated between $10,500 and $6,500. “Like every other bitcoin cycle, this one currently has its nuances,” noted Ted, who sees the first similarity to the interest rate policy of the US Federal Reserve (Fed).
– Advertisement –
In 2019, the Fed made three rate cuts through October. It also began expanding its balance sheet in September. The scenario is somewhat similar today.
Currently, the Fed has started expanding the balance sheet – according to the prevailing opinion of experts – with its Bank Term Funding Program (BTFP) and expanded swaps with five other central banks. Even though the Fed’s dot plot does not include a rate cut in 2023, the market is fooling it and predicts a rate cut of 100 basis points by the end of the year.
Related Reading: CFTC Vs. Binance: Cumberland Outlines 3 Scenarios for Bitcoin and Crypto
– Advertisement –
The price trend of bitcoin is also similar. In 2019, the price had bottomed out after moving 83% away from the all-time high (ATH). This was around 500 days before the next halving in 2020.
In 2023, the price bottomed out after falling 78% from the ATH. Like clockwork, the price of BTC found its bottom again with about 500 days left before the halving in 2024.
“The consistency between cycles are new ATHs, echo bubbles, bears and consolidation phases; Each time these phases play out a little differently for reasons other than price,” explained Ted, who shared the chart below.
Furthermore, analysts note on the charts that the 2021/22 eco bubble was more intense due to the collapse of FTX and therefore outperformed the 2018 eco bubble by multiples. Furthermore, Ted speculates that the post-COVID black swan price action should not repeat this cycle unless there is another black swan, such as World War 3. In conclusion, he states:
If you’re betting on new lows from here, it’s becoming clear that you’re betting on a breakaway at the moment (I’ll never say absolutes, but betting against history usually works well.) does not do).
Similarities to the Bitcoin FUD of 2020
Renowned analyst Andrew Kang shares a similar view. In a recent tweet, he drew attention to the current similarities of the year 2020. The year 2020 was marked by several regulatory FUD stories surrounding bitcoin.
Related Reading: Bitcoin Mid-Term Holders Hold 50,000 BTC, A Bearish Sign?
In October 2020, the CFTC opened a case against BitMEX and its founders. Shortly after, the Chinese government attacked OKEx and Huobi. After a quick correction, markets faced a barrage of regulatory FUD from US and Chinese regulators, as noted by Kang.
The US government went after Arthur Hayes and BitMEX. The Chinese government is after the executives of OKEx and Huobi. The market could not break below $10k and climbed the wall of concern. “The market could not break below $10k and climbed the wall of concern,” says Kang, who recently wrote:
Global crisis, markets rattled, months of long positions liquidated, only truly delinquent holders left, sellers and traders in disbelief ready to let all rallies fade. Same playbook, just 3 years later.
At press time, bitcoin was priced at $26,895, with Binance still struggling to shake off the news.
Featured image from iStock, Chart from TradingView.com
