#forecast 051 : A blip while we wait

Dear subscribers,

Welcome to The Bitcoin Forecast #51.

OK it’s only been 2 days since the last letter. If you recall we have been waiting for demand to come back into the market while the market price vs fundamentals has been in a zone where reversals can take place.

The last 48hrs has seen some notable changes to on-chain demand and supply so this is a very short update to keep you informed.

Top level summary for 28th Feb 2022 (current price $38.0k):

> Structural summary: The last 2 days has seen another wave of selling by hodlers which joins forces with futures market sell-off. While we are near extremes of oversold, there’s no signs of demand returning to the market. Risk-off is the main game in town.

> Price action expectation: Bearish until we see signs of demand coming back into the market.

All the best.


Analysis Breakdown

Holders have started another wave of selling

The last 2 days has seen another bout of selling from hodlers while futures markets continue their 3-month sell down unabated. Currently there’s no signs of the bear market abating. It does seem likely our prior support at $34k will need to be tested again.

In terms of the extremes of oversold we are at, here’s an update. The chart below compares on-chain demand and supply to the market price. As hodlers sold off, the market has not yet reflected this change which reflects in a rise in the oscillator (now less oversold). We now have room for the price to drop further before extremes of oversold and “the law of mean reversion” come back into play. In other words, there’s more room for the downward price action.