Bitcoin (BTC) has been absolutely slammed over the past five days. Since passing above $13,000 for the second time this year on Wednesday, the cryptocurrency has been on a clearly downward-sloping trend.
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In fact, the asset has lost around 25% since hitting $13,200, reaching a multi-week low of $9,750 on Monday. Despite the fact that analysts are expecting for bulls to experience some short-term reprieve, indicators suggest a drawn-out move to $8,000 — 20% lower than current levels.
Bitcoin at $8,000, Could it Happen?
So, what is making analysts suggest that a move to $8,000 could come to fruition?
Firstly, Timothy Peterson, a prominent American crypto fund manager, notes that Bitcoin’s current active account figure suggests that BTC is overvalued. This is an evident reference to the fact that Bitcoin, like other technological phenomenons, can be valued by its number of users, transactions, and other key statistics.
— Timothy Peterson (@nsquaredcrypto) July 14, 2019
According to Peterson’s model, which takes a 30-day median (as of July 13th) of the number of active accounts on the Bitcoin blockchain, BTC currently has a fair valuation of just above $8,000.
Sure, Bitcoin has deviated from its fundamental value on certain trading days, but as the analyst explained in a different tweet, in the medium to long term, network value should reflect actual value.
Peterson isn’t the only analyst eyeing $8,000. In a tweet issued on Saturday, Josh Rager, a prominent technical analyst and cryptocurrency commentator, looked to this level.
$BTC Weekly Chart
Another drop today, price has multiple long wicks at wkly resistance
Atm, there only sellers beyond this price & could lead to strong pullback
Confluence w/ both on-chain & chart data that could suggest any pullback would likely bottom out at $8k pic.twitter.com/VHP01caJtA
— Josh Rager 📈 (@Josh_Rager) July 13, 2019
Rager notes that a “confluence” of chart data and on-chain data suggests that a pullback “would likely bottom out at $8,000”. As he explained in the chart above, $8,000 acted as a key horizontal support and resistance level in the recent rally and 2018’s crash.
What’s more, there is also a CME Bitcoin futures gap around $8,500, which is one of the last gaps waiting to be filled.
And as Alfonso Esparza, senior market analyst at Oanda Corp, recently told Bloomberg: “[Bitcoin] continues to trade lower as comments from President Trump put downward pressure on the cryptocurrency. It could fall further to $8,000, giving back all the gains made in June.”
Ready to Rally Into Year End
While the outlook is currently negative, there are signs that Bitcoin will recover hard into the end of 2019.
Peterson recently laid out a model which plots how BTC’s performance in the first half of any given year relates to the second half’s performance.
Interestingly, the model, which can be defined as the positive slope y = 1.1409x + 0.5151, fits the trend to 90%, implying that it should be fairly accurate.
Related Reading: Refreshed Model: Bitcoin (BTC) to See $100,000 After 2020’s Halving
According to Peterson, Bitcoin gaining 180% year-to-date (effectively the 2019’s first half) implies that it has another 250% (“give or take”) left to run by the end of the year.
A 250% gain from current levels would mean Bitcoin ends the year at $40,000 — practically double BTC’s 2017 all-time high of just around $20,000. According to Peterson, even $50,000 is realistic.
Also, Thomas Lee, the co-founder of Fundstrat Global Advisors, believes that BTC will rally to $20,000 or even $40,000 in the fourth quarter, citing the increased awareness of cryptocurrencies caused by Donald Trump, Libra, monetary policy, and macroeconomic events.
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