In bearish markets in both 2012 and 2015, Adamant Capital published a bitcoin report telling investors that bitcoin is undervalued, which could lead to price increases. Each report was released when Bitcoin fell by more than 80% of the historical maximum. Investors who bought bitcoins at the time of issuing each report will receive excellent returns.
Now, 16 months after the all-time December 2017 high, the firm has released a new report, Bitcoin in Heavy Accumulation. Bitcoin is currently about 75% below its all-time high in 2017, and the report says the current bear market represents "an exceptional opportunity for value-creating investors." At this stage of hoarding, we expect Bitcoin to trade in the $ 3000 to $ 6500 range until a new bull market secures denarius cryptocurrency as a trillion dollar asset class. ”
The report collected data along the chain, as well as technical and fundamental analysis to form two key conclusions: as a payment network, Bitcoin must make a “significant breakthrough” in the next five years, and Bitcoin will eventually turn into an investment tool. set to evaluate trillion dollars.
Weak arms stretched out
Using Adamant Capital's proprietary Bitcoin unrealized gain/loss metric based on the dollar value of each coin at the time it was last moved, the report concludes that globally, investors' portfolios in bitcoin now average 14% of unrealized gains – a number which corresponds to the lows of the previous market cycle.
Weak hands "that didn't foresee how long and brutal this bear market could become" are now being driven out of the market, according to Adamant Capital's Tuur Demeester and Michel Leskrouwe, a verdict that is also backed by another firm. metrics - HODLer Net Position Change. This measures chain data to find the estimated monthly position change among long-term bitcoin holders. The green bars represent bitcoin investors taking or increasing their position, and the red bars represent investors selling:
Falling below $ 6 thousand, which took place from 14 to 15 in November 2018, is the key point that led many investors or weak hands to capitulate and sell their assets:
Dubbed "Bloody Wednesday", the day also marked the lowest mood in the market - a feeling of "disgust" in the market, with many traders expressing their frustration by insulting other investors on Crypto Twitter.
Meanwhile, overall interest in bitcoins was lower than ever, since Google’s trends on the keyword “buying bitcoins” fell to levels that were last observed in March 2017, when bitcoin was trading below 1500 dollars.
On the charts, technical factors also suggest that this was a key moment. The report compares the percentage drawdowns of previous bear markets and finds that since reaching its first major peak in 2011, Bitcoin has fallen 92 percent. Then in 2011, Bitcoin fell by 85 percent, and finally, the 2017 peak led to a drop to $3100 – a similar overall decline of 84 percent.
Catalysts of the next bull market
While bitcoin may be in the final stages of a bear market, Adamant Capital's report says that the market can still go down to retest the 2018 minima of the year to further digest 2015-2017’s stock readiness.
There are several risk factors that can trigger “negative demand shocks” – capitulation of miners, threats from regulators, controversial hard forks, and even a macroeconomic downturn – all of which have been called “credible price-cutting catalysts.”
But the report focuses on the fundamental factors that are expected to be the catalyst for the next run. These are factors such as financial support (increased interest from organizations), second-level scaling and growing adoption by millennia that are more positively related to cryptocurrency than older generations.
In early April, the price of bitcoin increased by almost 20 percent per hour 24. Adamant believes that institutions have already taken a significant position, pointing to the growth of the LedgerX Bitcoin Futures platform and the CME Bitcoin Futures product with new products and platforms in the development process. CME data shows that after the April break, most institutional asset managers have a net long position at $ BTC for the first time since April 2018.
Institutions are credited with financing the development of the next wave of infrastructure. The Goldman Sachs report highlighted investments in BitGo, TD Ameritrade cryptographic storage for supporting ErisX, Fidelity's own digital storage platform and ICK Bakkt.
This institutional involvement is expected to be coupled with improvements such as Lightning Network, will help realize Bitcoin more widely as a store of value:
“Bitcoin has the qualities of political neutrality, unparalleled security, globally available liquidity, and predictable financial policies,” the report says. “As it evolves, we expect Bitcoin to disrupt the $100 trillion liquidity investment vertical and become the globally used digital gold and reserve asset.”
You can download the report here.