Bullish Sentiment Flips Amid Large Liquidations

AUG 22, 2022 • 4 Min Read

Andrew Krohn

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🚨 In Case You Missed It

  • Fei Labs proposes the dissolution of Tribe DAO. Holders of FEI can redeem tokens for DAI.
  • ImmutableX over takes Solana in daily NFT sales volume, led by Gods Unchained, DC Comics, and Illuvium Land.
  • BendDAO Founder proposes emergency protocol changes amid liquidation concerns.
  • Samsung seeks approval to launch a crypto exchange in South Korea.

📊 Bullish Sentiment Flips On A Dime

  • On August 19, crypto markets witnessed a major plunge as we saw over $562 million worth of long positions getting liquidated, the largest amount since the liquidation cascade in June.
  • Out of the $562 million, 65% of the liquidations came from BTC and ETH positions, while the remaining 35% came from altcoins including Ethereum Classic, Solana, and Filecoin.
  • By the end of the day, Bitcoin had declined 10% while Ethereum had sunk by over 12%. Speculation of more intensive and prolonged interest rate hikes may be the leading factor in the market sell-off, alongside strength in the US Dollar Index (DXY).
  • The economic calendar showcases a busy week ahead, with the Jackson Hole Symposium beginning on August 25. Some important US economic data is also set to be released, including core PCE Price Index, Initial Jobless Claims, and revised Q2 GDP readings.
  • For more on market updates, Delphi members can read our latest Market Insights report here.

A Blast From The Past

  • As you can see from the three previous halvings, an interesting pattern is emerging with Bitcoin’s price action in relation to the periods of time post halving.
  • From the most recent one (May of 2020), we can see that it took Bitcoin 77 weeks to reach this cycle’s top of ~$69,000, in November of 2021. Jumping to the previous halving (July of 2016), it took Bitcoin 75 weeks to reach last cycle’s top of $20,000, in December of 2017. Now when we look at the halving in November of 2012, the pattern slightly falls apart (as it only took BTC 55 weeks to hit that cycle’s top).
  • However, one could argue that this could be chalked up to BTC being such an unknown and immature asset of that time. It’s possible that the influence of Bitcoin’s economic model over its volatile price action was still in its infancy of discovery and understanding.
  • It’s not just about seeking a cycle top, but also identifying cycle bottoms. From the previous two cycles, BTC bottomed out 59 and 53 weeks following its cycle top. If we use this historical data, it can give us reasonable estimations of when Bitcoin will find this cycle bottom and the next cycle top.
  • Based on this, history suggests a bottom sometime around the end of November 2022 and a new cycle top in August 2025. It is also interesting to note that in both of the previous bear markets, BTC found its price floor after falling 85%. From our current, all-time high, an 85% decrease would translate to $10,000 BTC.
  • For more on market updates, Delphi members can read our latest Market Insights report here.

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