Bitcoin (BTC) is done with its bear market, but the coming months may see a return to $20,000.
That is the outlook for Philip Swift, a veteran Bitcoin market analyst who co-founded trading suite Decentrader and data resource Look Into Bitcoin.
In his latest interview with Cointelegraph, Swift takes a look at what the near to long-term future holds for BTC price action.
After predicting the end of the bear market at the end of 2022, Swift is sticking by his appraisal of underlying price strength, while staying cautious on the odds of a deeper correction than last week’s 10% dip.
Bulls face many obstacles on the road to new all-time highs, he says, with government policy particularly troubling when it comes to potential price suppression.
Nonetheless, there is every reason to believe that for now, the bottom is in, and a solid period of growth awaits Bitcoin in the latter half of the year.
Cointelegraph (CT): In our last interview in October, you predicted the Bitcoin bear market would be over in 3 months. Do you think it’s gone for good?
Philip Swift (PS): Yes.
It really felt like we were close to max pain back in October, and we got the final capitulation shortly after in November. BTC then started trending up in January, 3 months after our interview.
This chart highlights how the current bear market has been really quite similar to previous cycles in terms of timing showing that human nature never really changes:
That does not mean we cannot have a decent correction in the next few months though. We may experience some volatility and chop after what has been an outstanding Q1 2023 where BTC has rallied 80%. I would not be surprised if we need to cool off for a little while.
CT: Since Bitcoin gained 80% in Q1, has BTC price performance in 2023 surprised you?
PS: It is not unusual for Bitcoin to put in major moves like that after such a long period of depression. As price rallied up from the lows we could see that funding rates were remaining flat/ negative, which indicated that there was major disbelief among derivative traders.
That helped BTC price keep trending up all the way to $30,000 with a succession of short squeezes.
CT: A large number of market participants remain skeptical of this year’s rally and expect a return to $20,000 or worse. To what extent do you agree with them?
PS: It is definitely possible as that would just be a -25% move to the downside from current prices. For a volatile asset like Bitcoin that could quite easily play out at some point in the next 3-4 months. Beyond that I think it becomes increasingly unlikely as I do believe that the halving narrative will kick in later in the year, which should increase buy pressure.
Related: Bitcoin price flatlines near $27K — What can trigger the next move?
CT: We’ve had various regulatory bombshells from which Bitcoin has managed to bounce back time and again in recent months. Do you think the market can continue to shake off such “mini” black swans?
PS: I do as long as these mini black swans are quite specific and not industry-wide. To expand on that, my greatest fear for Bitcoin is a coordinated attack by major governments to cut off the fiat banking on and offramps that support the space.I know Bitcoin is built to survive in isolation, but I do think that if such a coordinated effort is executed well it would significantly suppress price for a long time.
What we are seeing in the U.S. right now in terms of regulations is not particularly encouraging. It is definitely something to watch over the next couple of years.
CT: What’s your take on the U.S. banking crisis and its aftermath? Are we in for more shock events in the near to mid term?
PS: We will have to wait and see whether or not recent banking sector events were just the tip of the iceberg. However, I do think such events are ultimately a positive catalyst for Bitcoin — particularly among younger people, who will continue to question why they are better off having savings in a bank where there is custodial risk, versus a decentralized self-custodied asset like Bitcoin.Ultimately I believe that banking sector problems relating to customer deposits are long-term bullish for Bitcoin.
CT: All things being equal, how do you see BTC/USD performing this quarter and beyond? Is it too early to talk about a pre-halving build-up?
PS: I think we may need some sideways action from here for a few months after the stonking Q1 Bitcoin had. Toward the end of the year, late Q3 and into Q4, I expect the pre-halving narrative to really get going, which should have a positive impact on price.
Also, that should be enough time for the market to heal post-FTX. We should also have gone through much of the Mt. Gox selling risk. Any remaining selling should be evaluated and priced in by the market at that point.
CT: Filbfilb (CEO of Decentrader) recently released analysis of how Bitcoin might perform during the next halving cycle and doubled down on $180,000 as his top target. Where do you stand on next cycle’s blow-off top?
PS: It is certainly possible. I expect long term holders to start offloading their bitcoins as price goes beyond $80,000.That will start to bring new supply into the market. Eventually there will be too much supply for demand to soak up. I do expect that to be over $100,000.
Exactly where is very hard to call. Back in 2017 we saw a price rally from $10,000 up to the $20,000 high in less than 2 weeks! Many people forget about that. If we do get another blow-off top like that, such volatility makes it extremely difficult or near impossible to call the exact top.I think a realistic range would be $120,000-$210,000.
CT: What BTC price metrics currently have your attention?
PS: Bull market comparison: useful to understand where we are from a timing perspective.1yr HODL Wave: Shows that long-term holders have accumulated and will not sell en masse until price makes a new all-time high.Bitcoin 1-year HODL Wave chart. Source: DecentraderMVRV Z-Score: Indicates levels of market-wide “profit” — the difference between market cap and realized cap. Currently the market has just moved back into profit as the Z-score (blue line) has moved above the green accumulation zone. Still a long way to go until we get close to a market top.Bitcoin MVRV Z-Score chart. Source: Decentrader
CT: Is the NFT market dead?
PS: No, but it is currently in a state of major depression.While quality collections are broadly flat in USD terms, nearly all major collections are down versus ETH over the past several months.Volumes are way down since bull market highs — $150 million per week versus the bull market highs of $1 billion.We are even seeing NFT influencers on Twitter pivot to talk about other subjects like AI. That is not to say those influencers are not bullish long term on NFTs, just that interest in short to mid-term NFT prices has clearly evaporated. Having said that, we believe that we may soon be coming toward the latter stages of the NFT bear market.
While there may be more general market pain, we expect to see strategic investors increasingly on the lookout for quality NFTs at bargain prices. This could provide relief for a small number of collections in the near term.
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This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.