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Bitcoin is presently trading at $19,817 after dipping to lows of $19,513 on Aug. 28. As reported by U.Today, according to an analysis by veteran trader Peter Brandt, Bitcoin might have reached a potential bottom, having touched the target of the rising wedge pattern it has formed since mid-July.
After Bitcoin dipped to lows of $17,567 in mid-June, on-chain analytics firm Glassnode noted several floor formation indications flashing for the lead crypto asset. It indicated that all Bitcoin macro indicators, from technical to on-chain, had reached record lows, which had previously occurred in cycles when the bear market floor was developing.
But why is Bitcoin not rallying?
In a thread of tweets, Joshua Lim, head of derivatives at Genesis Trading, says BTC lagged behind the performance of other crypto assets through the last cycle. "Most traders intuitively feel that BTC trades "heavy" – why is this happening?'' Lim stated.
1/ BTC has lagged the performance of other crypto assets through the last cycle
— Joshua Lim (@joshua_j_lim) August 29, 2022
most traders intuitively feel that BTC trades “heavy” – why is this happening?
there’s two simple metrics we can look at to validate what we intuitively feel: pic.twitter.com/wOB30wJi6X
He explains the reason why Bitcoin remains weighed down. First off, institutions are no longer "coming" as they are already here. The world's largest asset manager, Blackrock, recently announced a private Bitcoin trust for its clients.
According to Lim, BTC is already a significant portion of most tradfi investors' crypto allocations. This means that in addition to being an asset that is de-risked when the market turns, it is also an asset that is shorted as a beta hedge.
Second, according to the Genesis Trading expert, going short BTC is still the simplest option available to both traditional investors and those who invest exclusively in cryptocurrencies. BTC linear derivatives trade around $30 billion per day and still make up 44% of all open interest. Lastly, BTC is not only being used as a short leg against altcoins; it is also being traded against equities or other risk assets, which weighs it down even more.
Tomiwabold OlajidePer Glassnode, while the present market structure is undoubtedly similar to the late-2018 bear market, it still lacks the macro trend reversal in profitability and demand inflows necessary for a sustainable uptrend. Therefore, the ongoing cycle bottom consolidation phase is most likely, as Bitcoin investors try to build a strong base that is subject to persistent uncertainty and unfavorable events in the macroeconomic backdrop.
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