Bitcoin Bear Market Will Last 'Max 2-3 Months' - Interview with BTC Analyst Philip Swift

Bitcoin Bear Market Will Last ‘Max 2-3 Months’ – Interview with BTC Analyst Philip Swift

Bitcoin (BTC) may see more pain in the near future, but the bulk of the bear market is already “potential”.

This is one of the many conclusions drawn by Philip Swift, a popular blockchain analyst who tracks the source of his data, LookIntoBitcoin, on several of the most well-known Bitcoin market indicators.

Swift, who with analyst Filbfilb is also one of the founders of the trading group Decentrader, believes that despite the current price pressures, there is not much time for Bitcoin to break out of its recent downtrend.

In a new interview with Cointelegraph, Swift revealed insights into what the data is telling analysts — and what traders should watch out for as a result.

How long will the average worker need to wait for the tides to turn and bitcoin to return from its two-year low?

Cointelegraph (CT): I did it pointed out Some on-chain metrics like HODL Waves and RHODL Ratio are pointing to a BTC bottom. Can this be expanded? Are you sure that history will repeat this cycle?

Philip Swift (PS): I think we are now on the cusp of the maximum opportunities available for Bitcoin. There are several key metrics on LookIntoBitcoin which indicate that we are at the bottom of the main cycle.

We are seeing the percentage of long-term holders peaking (1 year HODL Wave), which usually occurs in the depths of a bear market where those long-term holders don’t want to take profits until the price moves higher.

This has the effect of restricting the supply available in the market, which may cause the price to increase when demand eventually returns.

Bitcoin HODL Waves chart. Source: LookIntoBitcoin

We’re also seeing metrics like the RHODL Ratio pull back in their build-up areas, which shows how much euphoria is now draining from the market. This removal of positive sentiment is necessary to form a bottoming range for BTC.

The RHODL ratio highlights that the cost basis of recent bitcoin purchases is significantly lower than prices paid 1-2 years ago when the market was clearly jubilant and expected +$100k bitcoin. So it is able to tell us when the market will reset in preparation for the start of the next cycle.

Bitcoin RHODL Ratio Chart. Source: LookIntoBitcoin

CT: How is this bear market different from previous BTC cycles? Is there a silver lining?

note: I’ve been in the 2018/19 bear market and it really felt very similar. All the tourists have left and you only have the crypto-committed enthusiasts in the space. These guys will benefit the most in the next bull run – as long as they don’t go crazy with leveraged trading.

In terms of silver linings, I have a couple! First, we’re actually a fair way through the market cycle, and that’s probably going to be through the majority of this already bear market. The chart below shows Bitcoin’s performance in each cycle since the halving, and we’re already around the surrender points for the previous two cycles.

Bitcoin bull market comparison chart. Source: Philip Swift / decentrader

Second, the context of the macro is completely different now. While it was painful for the bulls to see that Bitcoin and cryptocurrencies are inextricably linked with the faltering traditional markets, I think we will soon see a show on Bitcoin as confidence in (main) governments crisscross down beyond the point of no return.

I believe this lack of confidence in governments and their currencies will create a rush to private “hard” assets, with Bitcoin being the main beneficiary of this trend in 2023.

CT: What other key metrics in the series would you also recommend to monitor to determine the bottom?

note: Be wary of Twitter characters displaying Bitcoin charts on the chain cut by weird/strange variables. Data like this rarely adds any real value to the story shown by the key key metrics and these characters do so only as a way to get attention rather than genuinely trying to help people.

Two metrics are particularly useful in current market conditions:

MVRV Z-Score is An important and commonly used measure of bitcoin. It shows the extremes of the bitcoin price as it moves above or below its realized price. The realized price is the average cost basis of all bitcoins purchased. So it can be considered as the approximate break-even level of the market. The price only drops below this level in severe bear market conditions.

When this happens, the indicator on the chart drops to the green “accumulation” area. We are currently in that territory, which indicates that these could be very good levels for a long-term strategic investor to accumulate more bitcoin.

Bitcoin MVRV Z-Score Chart. Source: LookIntoBitcoin

Project Boyle takes a multiple look at miners’ returns against their historical standards. When the pointer drops into the green build-up range, as it is now, it shows that many miners are under great stress. This often happens at the lows of the main bitcoin cycle. This indicator indicates that we are approaching a major cycle low for Bitcoin if we haven’t already reached the bottom.

Bitcoin Puell Multiple Scheme. Source: LookIntoBitcoin

CT: Fellow analyst Filbfilb predicts that BTC will reverse course in the first quarter of 2023. Do you agree?

note: yes I do. I think traditional markets will probably see a bit more contraction in early 2023. At worst, I see cryptocurrencies going through a rough time until then, so maybe another 2-3 months max. But I think the majority of fear will soon turn toward governments and their currencies – and that’s true. So I expect private assets like Bitcoin to outperform in 2023 and surprise many convicts who say Bitcoin has failed and will go to zero.

Related: Bitcoin Analyst Describing 2018 Bottom Warns ‘Bad Winter’ May See $10K BTC

CT: October is a historically bad month for stocks – not so much for Bitcoin. How long do you expect BTC to be coherent with riskier assets and what is the catalyst?

note: Bitcoin has been a useful indicator of forward-looking risk to the markets for most of 2022. What will change in 2023 is that market participants will appreciate [that] Most of the risks actually lie with governments, not with traditionally identified “risk” assets. As a result, I anticipate a narrative shift that will benefit Bitcoin next year.

The UK government’s actions on its mini-budget two weeks ago were a major turning point for this potential narrative shift. The markets have shown that they are ready to show their disapproval of bad policy and incompetence. I expect this trend to accelerate not only in the UK but in other countries as well.

CT: Are you surprised by the poor performance of Ethereum after the merger? Are you bullish on ETH in the long-term through supply-burning mechanisms?

note: [Ether] (ETH) had a strong short-term narrative with the consolidation, but it was in the context of a global bear market. So it comes as no surprise that its price performance is lackluster. In the end, general market conditions took over, which was to be expected.

In the long run, Ethereum is set to do an exceptionally good job. It’s a crucial component of Web3which is growing exponentially. So I am very optimistic about Ethereum over the next couple of years.

CT: What is the best jurisdiction for a Bitcoin/crypto trader today?

noteSomewhere low tax and crypto-friendly. Personally, I think Singapore is great and there is a growing cryptocurrency scene here, which is fun too. I have friends in Bali and this also looks great and is reasonably priced.

CT: Anything you would like to add?

noteResist any temptation to abandon cryptocurrencies near the bottom of a bear market. Just be patient and use some good tools to help manage your emotions.

The opinions and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risks, you should do your own research when making a decision.