Analysts predict that the Bitcoin price range "consolidation" will continue

On-chain metrics and technical indicators for BTC are trading near historic lows, but analysts believe a new “macro catalyst” could show that the present range isn’t the bottom.

The value drop across the cryptocurrency market in recent months has been one for the history books, with the entire cryptocurrency market cap declining from $3 trillion to $991 million over this period.

June was especially trying for investors, with Bitcoin’s price dropping nearly 40% to record one of its worst calendar months on record, according to a recent report from cryptocurrency research firm Delphi Digital.

In the light of the significant market downturn, a number of BTC price and on-chain indicators have begun to resemble those seen during prior market bottoms, yet this does not imply that traders should expect a turnaround any time soon because history shows that periods of weakness can go on for months.

The resilience of the United States Dollar has been one of the most important elements weighing on cryptocurrencies and other risk assets.

BTC is presently near a local bottom formed after the 2017 cycle high near $20,000, “the last clear structural support on the high timeframe bitcoin chart,” where it is attempting to establish itself. BTC has recently attempted to form a local bottom around the 2017 cycle high at $20,000.

This current cycle is the first time in Bitcoin’s history that its price has fallen below its all-time high set during a prior bull market cycle. Should BTC fail to defend near $20,000, Delphi Digital anticipated that it would “hold around $15K, and then fall to approximately $9K before recovering.” While those figures may appear bleak, keep in mind that BTC’s price plummeted by 85% between peak and trough throughout both of the preceding two major bear markets.

If the same scenario were to play out during the present bear market cycle, BTC would fall to $10,000, matching a 50% drop from current heights and falling in line with the predicted price range of 2019 through 2020.

According to Delphi Digital, the percentage of Bitcoin supply kept in profit and the Bitcoin realized profit/loss ratio are approaching those seen during prior bear markets, but they have “a little more room to go” before reaching their lows for this cycle.

BTC/USD price vs. realized P/L ratio. Source: Delphi Digital

According to the firm, “momentum indicators and valuation metrics may remain oversold or undervalued for an extended period of time,” making them “poor timing tools” that are not capable of predicting immediate reversals. Contrarian investors might also keep an eye on the market sentiment as well as the Fear and Greed Index, which has recently hit historic lows.

Delphi Digital believes bitcoin has potential to rise further if the price breaks out of its current range. “BTC has room above due to the previous liquidation cascade in the wake of 3AC,” according to Delphi Digital, and the subsequent major barrier was identified as $28,000. According to Delphi Digital, “BTC will likely continue to consolidate until we get some kind of macro catalyst.”

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