By Landon Manning
New data from Blockware Solutions, a blockchain research firm, pointed to a series of bullish omens to suggest that bitcoin may be nearing the end of its downward trajectory in the immediate future.
As long-time participants in the Bitcoin community are well aware, the crypto space can be extremely volatile even at the best of times (for better or worse), and both large spikes and pitfalls can end up appearing or melting away without warning or much in the way of explanation. Nevertheless, the overall tendency in the value of bitcoin since its inception has shown a consistent rise in its value.
Although the global COVID-19 pandemic wrapped up its first year with an absolute bonanza for bitcoin; seeing its price spike and spike again to reach heights of more than three times its previous peak in 2017, this situation would not last forever. Eventually, the price fell in the fourth quarter 2021 and throughout 2022, generally staying over the 2017 peak. The winter of 2022 has seen the price stabilize and then drop again on several occasions, but this new research suggests that this price cycle may finally be reaching bottom.
Blockware Intelligence, a subsidiary of Blockware Solutions, released its 2023 market forecast in early December, pointing to a wide variety of conditions in the current crypto space that may lead to future growth. As one of the more infamous signals, Blockware pointed to the rapid collapse of several major crypto firms in the wake of the FTX implosion, including Celsius, BlockFi and others.
But one of the main things that the report focuses on is the difference in realized price (RP) between short-term holders (STH) and long-term holders (LTH), which can be tracked in several steady patterns throughout the entire history of Bitcoin. Due to the “hodler” ethos within the community, there are large numbers of users who tend to put money into bitcoin and keep it there indefinitely, meaning that the LTH RP shows little volatility and a consistent history of tidy profits. The STH RP, however, is more largely composed of those users who see bitcoin as an investment to earn them more dollars, engaging in practices such as day trading and altcoin speculation. This figure is not only more erratic, but also shows a consistent tendency to always be, in the main, slightly underwater relevant to Bitcoin’s actual price.
As Blockware’s report has shown, every time that the long-term holders’ price also puts them at a loss, this goes along with a price floor before the price climbs once again. With this happening consistently throughout more than a decade of Bitcoin’s existence, Blockware predicts that the bottom is in once again. This report claims, among other things, that a growing momentum in the on-chain users of Bitcoin will turn into a major increase due to these and other factors, and that this can plant the seeds of the next bull market.
Ultimately, despite all of the various figures that may or may not lead to another year of growth for Bitcoin, the community as a whole knows not to get too hung up on such predictions as this. It is true, a boom in bitcoin is good for the entire community, and new investment opportunities do lead to growth, but at the end of the day, Bitcoin is durable enough to withstand a great many setbacks. The entire world of international cryptocurrency was built on the back of Bitcoin forging a trail; fighting intense regulatory hostility and repeated crashes that were heralded as the deaths of the dream. And yet, despite all this, Bitcoin persists and will persist, and it will take cryptocurrency into the future as its true leader.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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