Zuger Partners AG
Recommended Reading: Futures Weekly Wrap: Cryptos Could Be About to Capitulate by Binance
His forecast puts Bitcoin around $20,000 at the end of the downtrend.
The report is free and can be downloaded from the Binance website here.
Bitcoin’s Entity-Adjusted Dormancy Flow helps understand the spending behavior of experienced market participants. Whenever there is a substantial reduction in BTC spending from the so-called “old hands,” the dormancy value falls below 250,000, signaling that the market is in full capitulation.
In previous bear cycles, a dormancy value below 250,000 represented a great historical buy zone. Bitcoin’s Entity-Adjusted Dormancy Flow currently sits around 205,000 and can still drop to 180,000 to mark the end of the downtrend.
Bitcoin Still Bound for Further Losses
At about $36,300 on Sunday, Jan. 23rd, Bitcoin dropped below the psychological $40,000 barrier to hit a six-month low of nearly $34,000, and the weekly Relative Strength Index broke the 42 support level for the first time in two years.
From a technical perspective, it appears that BTC could soon experience capitulation. Price history shows that every time the weekly RSI has dropped below 42 since 2014, the pioneer cryptocurrency tends to shed about 53% in market value. A similar event puts Bitcoin at around $20,000 by the end of the downtrend.
On Binance Futures, BTCUSDT Long/Short Ratio continues trending downwards to hit a new low of a 1.89 ratio on Jan. 23rd. It appears that traders remain pessimistic about Bitcoin’s future price action as only 65.40% of all accounts remain net-long.
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