Charles Edwards, a renowned analyst and founder of Capriole Investments, has outlined nine reasons why Bitcoin has been in a new bull market since January in a new Twitter thread. Contrary to the growing voices that Bitcoin will plummet again, Edwards is giving a bullish prediction.
The first reason is that Bitcoin has exited a multi-month period of low value, as defined by many on-chain metrics, including trading at its electric cost. Historically, this has been the global price floor for Bitcoin. The current bear market was the second longest period Bitcoin has spent at its electrical cost.
The second reason is the insanely fast recovery after the FTX crash. “We eclipsed the price collapse of a top 3 fraud in human history in just 2 months,” Edwards said, further explaining that this proves there are very few marginal sellers left.
[A]nd the level of deep value was too much to maintain prices that cheap for long, regardless of such negative news and financial damage.
According to Edwards, there is also an important technical confirmation at the most important price level on the Bitcoin chart, the breakout above $20,000. The price is of particular importance for five reasons at once: it is the all-time high of 2017, the FTX collapse price, a critical order block level, the boundary for profitable mining, and a psychologically important “round number.”
More Reasons To Be Bullish On Bitcoin
The Capriole Investments founder also cites the recent massive short squeeze as a fourth reason for a bear market end. “We witnessed a 40% short squeeze with identical characteristics to the 2021 China mining ban Bitcoin price bottom.”
Moreover, according to Edwards, the Bitcoin price has entered a new regime of upward momentum, which is confirmed by several long-term moving averages crossing to the upside. “Take your pick, almost all daily averages are curving up now,” Edwards said.
He also sees one reason in the Bitcoin halving, which he says will be “the most important halving of all time,” as BTC is about to become the hardest asset in the world, overtaking gold as the best store of value in the world. The bottom formation timing was perfect, he said:
We are at optimal halving cycle timing where Bitcoin typically bottoms (Q4 2022 and Q1 2023). Like clockwork, Bitcoin has bottomed in the window 12-18 months prior to every halving in the past.
Also, Bitcoin has already reached its biggest pain point with a price discount of over 80%, he said. “At the end of 2022, sentiment was at its worst, and market hedging at its highest on record. As I tweeted in December, most major metrics for sentiment across crypto and equities were showing their worst, or second worst, readings in history.”
Edwards concludes with perhaps the most pivotal reason, although it is probably the most controversial. According to him, there will be a macroeconomic regime change as early as 2023. The Fed, according to the analyst, will pause on interest rates and change its policy, which would be massively bullish for Bitcoin.
The last point is particularly controversial because the market is currently pricing in a “higher for longer” interest rate policy from the U.S. Federal Reserve after both the Consumer Price Index (CPI) and Personal Consumption Expenditures Price Index (PCE) came in much worse than expected.
As a result, at the time of writing, the Bitcoin price continues to struggle with its key support at $23,300.
Featured image from Hans Eiskonen / Unsplash, Chart from TradingView.com