Bitwise: Has the crypto market bottomed out?

Source: Matt Hougan, Chief Investment Officer of Bitwise; Compiled by Golden Finance Claw

Over the past two weeks, my three favorite cryptocurrency research teams (excluding Bitwise) have all published in-depth articles on the same topic: Has the crypto market bottomed?

• Galaxy Digital: Bitcoin may not have bottomed yet. These data suggest where it might fall.

• NYDIG: What factors are dragging down Bitcoin?

• Standard Chartered: The bottom has arrived

All of these articles are excellent, with a wealth of in-depth statistics and detailed analysis. I recommend you read them all.

But if you want to find a simple answer to this question, I have some bad news: these three outstanding research teams do not agree.

Has the crypto market bottomed?

• Galaxy Digital: No

• NYDIG: Maybe (though the odds are unlikely)

• Standard Chartered: Yes

Let’s dig into what each statement is saying.

Three companies, three viewpoints

Galaxy Digital

Galaxy analyzed Bitcoin’s 17-year history and found that when the crypto market hits bottom, 13 different conditions always appear at the same time. These conditions include indicators related to valuation, profit-taking, miner pressure, market trends, historical cycles, and market sentiment. For those who have followed Bitcoin for the long term, many of these statistics will feel familiar, such as the 200-week moving average, the Fear and Greed Index, and the Mayer Multiple.

Galaxy found that of these seven conditions, four are fully met, two are partially met, and seven are not met. It concludes that Bitcoin’s bottom will be between $30,000 and $54,000, with $40,000 to $46,000 as their “benchmark forecast.”

NYDIG

NYDIG uses a similar multi-metric approach. It compares Bitcoin with previous cycles and compares the current pullback with past pullbacks from aspects such as “drawdown duration,” holder profit and loss (referred to by Bitcoin users as “MVRV,” i.e., the ratio of market value to realized value), and other indicators. The indicators NYDIG focuses on are close to the lows of past cycles, but they have not yet reached the maximum decline.

The report concludes that the current pullback “shows many characteristics of cyclical lows, but fewer signs of the kind of total collapse that is commonly seen when Bitcoin bottoms in history.” However, the report points out that the current market cycle may have been fundamentally altered by institutional demand, meaning the magnitude of this pullback could be smaller than before. If that is the case, then the bottom may already be in place.

Standard Chartered

Standard Chartered is not blindly optimistic about Bitcoin. In February of this year, when Bitcoin traded at $67,000, the bank lowered its year-end expectations and said the price could plunge to $50,000. The reasons it gave were a worsening macroeconomic environment and concerns about ETF sell-offs.

But last Friday, the institution said that Bitcoin’s price had bottomed, falling to $59,000. Part of the reason was the outlook for the US-Iran agreement and the long-awaited SpaceX IPO (the institution believes that ETF holders have been selling Bitcoin to raise funds for this issuance, and that selling pressure will begin to ease).

Standard Chartered currently expects Bitcoin to reach $100,000 before the end of the year.

Common points among these three reports

You might be wondering why I’m sharing three reports with different viewpoints—one bullish, one neutral, and one bearish. What conclusion should you draw from them?

The fact is: the commonalities among these three reports are actually more than you might think at first glance. For long-term investors, their shared consensus is more valuable than their disagreements:

1、They all agree that there will be a bottoming rebound this year.

2、They all believe we are closer to the trough than to the peak.

3、They all believe Bitcoin will enter a new bull market.

At the time I’m writing this, Bitcoin is trading at about $67,000. One report says the bottom is at $59,000; another believes Bitcoin could fall to $50,000; and another says Bitcoin’s bottom could be around $43,000. But it’s worth reiterating: all three reports believe Bitcoin will bottom.

That’s the key. If you’re a long-term investor, whether Bitcoin bottoms at $40,000, $50,000, or $60,000 doesn’t matter. What matters is whether it can rise to $100,000, $200,000, or even $1,000,000 afterward. If it can reach any of those targets, that would be a very substantial return.

This is the irony of the current situation. We’re all asking whether the bottom has already formed, but what truly matters is whether the top has already formed. In my view, as long as the top has not yet formed, Bitcoin remains an excellent buying opportunity.

So, has the top arrived?

I don’t think so. Bitcoin’s long-term drivers have not disappeared; in fact, they are stronger than ever. Government debt continues to accumulate, with no plan to rein it in. Inflation keeps changing the yardstick for measuring wealth. People’s trust in centralized institutions such as governments and banks is weakening. The world is becoming increasingly digital. Access to Bitcoin is also improving. Bitcoin’s early user base is aging, becoming wealthier, and gaining influence.

There are indeed some threats worth worrying about, including quantum risks and tighter regulation. But in my view, the current situation is better than any previous crypto winter.