- Davis believes the market’s focus should be on the downtrend line that has been forming since 2017.
- Lark Davis predicts a tough July for Bitcoin.
As the crypto market turns bearish, there is an increasing number of calls for Bitcoin, which has fallen as low as $10,000. But can bitcoin fall that much? If yes, how is this done? What are the factors preventing the Bitcoin price from falling further?
Popular cryptocurrency bull and YouTuber Lark Davis provided insight into these questions in his latest video. Davis said the focus shouldn’t be on whether or not Bitcoin is trading at $10,000. Instead, the focus should be on the downtrend line that has been forming since 2017. He explained his reasons: This current bear market has broken most historical models.
For example, trading has never been below a previous all-time high. But that’s what happened in the last few weeks. Davis also noted that BTC has never closed a weekly candle below the 200-week moving average.
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However, now it has happened. Additionally, there has never been a monthly candle this hard, with Bitcoin posting a nearly 40% drop in the month before. June 2022 represents the worst monthly candle ever for Bitcoin. Historical models are broken because this time is remarkably different.
Hence, he suggests traders to focus on the downtrend line that has been forming since 2017. He said that was a more reasonable level to consider as potential blowout bottom. Using this trend line as a prediction tool suggests that the lows will be around $15,000.
When the bottom is finally printed for Bitcoin, the market will enter what Davies calls the “Valley of Despair.” Bitcoin price will move sideways for months. Davis predicted that many people would sell their bitcoin holdings during this time.
Miner and whale equation
One of the biggest concerns most people have right now is that bitcoin miners will continue to sell their bitcoins. Therefore, it will be an important catalyst for the price decline. Davis claims that miners sell but do not control the supply of bitcoin. They only control 50,000 to 60,000 bitcoins per month.
So, according to Davis, the fear factor isn’t that great. They sell a few thousand bitcoins a month even though they have more. Meanwhile, bitcoin whales have added 140,000 bitcoins to their holdings over the past month, according to Davis. Even small retail investors have added over 36,000 bitcoins in the past month. That’s 10 times the amount of Bitcoins miners are selling. This amount is more than any miners landfill. Still, Davies predicts a tough July for Bitcoin, mostly due to macroeconomic events.
The inflation figures will be released on July 13th and the Fed meeting on July 26th. However, Davis believes there is light at the end of the tunnel. For example, commodity prices (like oil and wheat) began to fall significantly.
These drops start to have a ripple effect. For example, the cost of shipping a container from Shanghai to Los Angeles fell by 38 percent. This is a huge reduction in shipping costs. Davis explained that if inflation numbers come down and the Fed hikes interest rates to 0.5 percent instead of just 0.75 percent, the market is likely to be bullish. However, he added that the market should be prepared for the opposite of the above scenario.