What's the outlook?
In its latest market analysis, QCP Capital said that BTC broke through the $6,0000 support level under heavy selling pressure, and BTC miners showed signs of capitulation, which historically usually means that prices have bottomed out. The last comparable decline in computing power occurred in 2022, when Bitcoin was trading at $17,000. In addition, despite the severe sell-off in the crypto market, the options market remains optimistic, especially for ETH call options expiring in September and December.
QCP Capital believes that given the recent selling pressure from Bitcoin, as well as the promotion of factors such as Mt.Gox, miners and government regulation, ETH is likely to rebound more strongly due to the upcoming filing of the Ethereum spot S-1 document.
Andrew Kang, co-founder and partner of Mechanism Capital, is more pessimistic.
He said that most market participants do not realize the severity of the possible decline in Bitcoin's 4-month volatility range. The closest analogue we can find is the range in May 2021, when Bitcoin and altcoins also experienced a parabolic rise. Here, the $50 billion+ crypto leverage is similarly close to all-time highs (excluding CME), but in this case, we have a longer range (18 weeks vs. 13 weeks) and have not yet seen an extreme whipsaw, which we experienced several times during the 2020-2021 bull run.
He also said that the initial estimate of the low of $50,000 may be too conservative and we may see a more extreme pullback to the $40,000 range. Such a pullback could cause considerable damage to the market and could require several months of shock/downtrend (recovery period) before a reversal to the upside could occur.
