Is the brutal crypto winter finally thawing? New analysis suggests Bitcoin is on the cusp of an explosive bull run, with key indicators flipping green for the first time since the downturn began in late 2021.
After plummeting nearly 70% from its November high of around $69,000, Bitcoin has consolidated in a narrow range between $20,000 and $25,000 in recent months. But according to independent crypto analyst Seth_Fin, two technical indicators are now signaling that a major breakout could be imminent.
In a viral Xpost on Saturday, Seth_Fin revealed that the Bitcoin Gaussian channel has turned green. This channel, derived from statistical concepts, is used to predict future price trends. Historically, a green Gaussian channel has been a reliable leading indicator of an upward breakout.
At the same time, Seth_Fin noted that the Bollinger Band Width Percentile has reached its lowest point since the downturn began. The Bollinger Bands measure volatility, and a low reading indicates that a period of high volatility is ahead. While the indicator does not specify direction, volatility typically precedes major price swings.
"The Bitcoin Gaussian channel just turned green, and we've retested the mid-band!" Seth_Fin wrote. "Looks like the bear market might be in the rearview mirror. But that's not all! The Bollinger Band Width Percentile is at its lowest, signaling an impending EXPLOSIVE move!"
So could this finally be the end of the crypto winter? While past performance is no guarantee of future results, Bitcoin has historically bottomed out and entered new bull runs following key events like the block reward halving. The last halving was in May 2020, right before Bitcoin rocketed to an all-time high of nearly $69,000 in 2021. The next halving is expected in 2024, so anticipation is building.
Regulatory Developments, Institutional Adoption Could Propel Rally
Fundamental factors could also help propel the next Bitcoin bull run. Investors are closely monitoring regulatory developments, especially the potential approval of a Bitcoin spot ETF in the US. Unlike futures-based ETFs already on the market, a spot Bitcoin ETF would hold BTC directly, allowing mainstream investors to gain exposure without custodying coins themselves.
The SEC has rejected over a dozen spot Bitcoin ETF applications to date, but regulators could be warming up to the idea. Approval would unleash a flood of institutional capital into Bitcoin and other digital assets.
Big banks like Deutsche Bank are also preparing to offer crypto custody services for asset managers and other institutional investors. Mainstream adoption like this further validates cryptocurrency as an investable asset class.
For now, Bitcoin is still clinging to support at the psychologically important $20,000 level. After several failed attempts to break out above $25,000 this summer, Bitcoin has been directionless and volatility has dried up.
But according to Bollinger Bands, that low volatility period is coming to an end soon. When the bands squeeze like they are now, a violent move often follows.
Liquidation of FTX Assets Creates Market Uncertainty
However, analysts caution that the path is unlikely to be smooth. Ongoing developments in the FTX saga are weighing on market sentiment. This week, the bankruptcy court approved FTX to begin liquidating its vast cryptocurrency reserves to pay back creditors.
The defunct exchange holds over $5 billion worth of digital assets, including Bitcoin, Ethereum, Solana, Serum, FTT, and many more. Potentially having this massive quantity of coins hitting the open market has traders on edge.
"The court's decision raises serious concerns about market integrity and the protection of customer assets," said attorney Adam Landis in an interview.
Liquidations of this magnitude risk severely impacting prices, especially for smaller cap coins with lower liquidity. Investors fear a new wave of contagion that could lead to cascading losses, defaults, and loss of confidence.
"While liquidations may be unavoidable, regulators need to ensure an orderly and transparent process," Landis added. "Any appearance of impropriety could undermine trust in cryptocurrency markets broadly."
Bitcoin Offers Freedom from Corrupt Institutions
The FTX debacle highlights the need for truly decentralized cryptocurrencies like Bitcoin, detached from counterparties, middlemen, and centralized points of failure.
Bitcoin's strictly capped supply and tamper-proof blockchain offers a trustless alternative to corruptible cease-and-desist financial institutions. Handing over our monetary sovereignty to corporations and governments has repeatedly ended in catastrophe.
Perhaps this disaster will serve as a wake-up call, forcing the industry to re-embrace the foundational principles it was built on -– financial autonomy, censorship-resistance, and eliminating the need for trusted third parties. The market needs incorruptible money.
Bull Run in 2023 Would Mirror Previous Cycles
If Bitcoin does reverse course and enter a new bull market in 2023, it would closely mirror past price cycles.
During Bitcoin's first epochal rally in 2013, the coin rose over 5,000% before crashing 85% in 2014-2015. It then ground out a slow recovery over the next 2 years.
In 2017, Bitcoin once again rocketed over 1,300% to around $20,000 before erasing 83% of those gains in 2018. What followed was another period of consolidation and maturation of the asset class.
This time, Bitcoin catapulted a staggering 1,400% from its COVID-crisis lows to an all-time high of $69,000. A reprisal of past cycles would imply the bull run still has room to run after a prolonged shakeout period.
Historical Examples Suggest Bitcoin Could Emerge Resilient
Bitcoin has been declared dead over 450 times, but it has recovered from every crash and scandal since its inception.
Many wrote off Bitcoin after the biggest crypto exchange Mt. Gox collapsed in 2014 due to fraud and mismanagement, eroding faith in the asset. But Bitcoin survived to notch all-time highs just 3 years later in 2017.
When the Silk Road darknet market was taken down in 2013, authorities seized thousands of Bitcoins. But instead of fading away, Bitcoin adoption only accelerated.
The FTX implosion is unlikely to be any different. Though painful in the short term, cleansing periods of volatility flush out bad actors and pave the way for innovation.
Key Questions Remain Unanswered
- Will the FTX collapse unleash a new crypto contagion?
Regulators must ensure liquidations are conducted in a controlled and transparent manner to avoid sparking panic selling. If mishandled, forced selling of FTX holdings could dent confidence.
- How much collateral damage will innocent investors suffer?
Thus far, FTX customers have been unable to access frozen funds on the exchange. Watchdogs must determine how to equitably compensate ordinary users who did nothing wrong.
The road ahead is foggy, but Bitcoin has a history of emerging from darkness stronger. Though this winter has tested cryptocurrency investors' resolve, historical data hints the thaw may be underway. A glimpse of spring has appeared on the horizon.