Bitcoin analyst CryptoCon posted a tweet yesterday that actually contains a non-negative forecast about the future value of bitcoin.
Chris Moody's Market bottom indicator tells us clearly, that the #Bitcoin bottom is in the past!— CryptoCon (@CryptoCon_) September 3, 2023
When the green lights shut off, bottom time is over. We are now 6 grey candles deep putting us in a time when Bitcoin takes a small pause.
So many people seem to… pic.twitter.com/hL19RuWXPQ
Technically it is not a prediction, but it is a clear indication of future movements.
It also cannot be called an optimistic prediction because it does not say that the market value will rise, only that it is unlikely to fall.
The bottom has been reached: Predicting Bitcoin’s Value
By ‘bottom’ we mean the lowest point a value has reached in a given period, and below which it has never fallen.
In this case, the reference period is the period between the bursting of the speculative bubble in 2021 and the possible start of a new bull run.
In fact, all three of Bitcoin’s halving periods have been followed by a bull run, and this is also the hypothesis circulating about the next halving period coming next spring.
While there is no certainty that there will be another bull run after the next halving, it seems almost inevitable that one will come sooner or later. The key question is what price level it will start from.
According to CryptoCon’s analysis, the bottom reached in November last year should hold, so the price of bitcoin should not fall below $15,000 before the next bull run begins.
In fact, this should be taken as a prediction, although it does not clearly state where the value of BTC will go during the next bull run.
The only thing he says for sure is that he believes the bottom is now behind us.
However, he also states that the top of the next cycle should come at the end of 2015, i.e. the end of the year following the halving year, as has been the case in all three previous halving years.
The supply shortage and the link to bitcoin’s predicted value
There is another piece of data that seems to support this hypothesis.
Indeed, in order for the price of bitcoin to fall back to $15,000, it would have to be hit by a massive increase in supply and therefore selling pressure.
If a wave of selling were to be unleashed with limited supply, the price would certainly fall, but not by that much.
Instead, the supply of BTC on exchanges is at its lowest level in years, and for the first time in its history, BTC withdrawals from exchanges have exceeded deposits for at least three consecutive months.
For the first time in history, #Bitcoin withdrawals from exchanges have surpassed deposits for three consecutive months. ?— Bitcoin News (@BitcoinNewsCom) September 2, 2023
Self-custody is on the rise. ?
h/t @ali_charts pic.twitter.com/JZp2arAfOA
So the reality is that the supply of BTC on exchanges is shrinking, and this does indeed seem incompatible with a possible return to $15,000.
This does not mean that the price cannot fall, but that it is unlikely to make a new bottom in this cycle in the short term.
However, it should be stressed that this trend could also reverse in the coming months, so it cannot be ruled out that the supply of bitcoin on exchanges could increase significantly again before halving.
However, there is a rather important consideration to add.
It is possible that the continued decline in the supply of BTC on exchanges is also due to the growing popularity of self-custody.
After the numerous failures of 2022, many holders have realised that it is risky to entrust the custody of their Bitcoins to a third party. This has led many to withdraw their BTCs from exchanges and store them in their own wallets.
While this process reduces the supply of BTCs on exchanges, it does not a priori preclude them from returning their Bitcoins to exchanges should they wish to sell them.
However, while in the past many people left their Bitcoins on exchanges, nowadays it seems that more and more holders are opting for self-custody, and with BTCs now growing at a slow pace, it is conceivable that the supply of BTCs on exchanges will remain lower than in previous cycles.
As of today, 6.25 BTCs are created per mined block, and one block is mined every 10 minutes or so. This equates to around 900 BTC being created per day, or less than 330,000 per year. Out of a total of almost 19.5 million bitcoins in existence, this is less than 1.7%, and with the next halving, this percentage will suddenly be halved.
It therefore seems unlikely that there will be more BTC for sale on exchanges in the next cycle than in previous cycles.
Potential strong moves
In a situation like the current one, with relatively few BTC on exchanges and very low trading volumes, rapid but not necessarily significant inflows or outflows could cause strong and sudden shocks to the price of bitcoin.
Many are convinced that, until the next halving, the value of BTC could indeed continue the lateralisation phase that began in mid-March, i.e. oscillating between $25,000 and $31,000 with rare and rapid excursions above and below these thresholds. This does not detract from the fact that strong and sudden shocks can occur within this range.
As long as the price does not fall significantly and sustainably below $24,800 or rise significantly and sustainably above $31,800, the lateralisation phase that has been underway for almost six months will continue, although not necessarily without volatility.
On the other hand, everything would change if the period of oscillation within this band were to end, but many are betting that this will not happen until the next half year. However, it should not be forgotten that the price of bitcoin has often surprised everyone in the past by behaving differently than expected.