Placeholder Partner: Bitcoin may fall to around $3,000

Many people ask me where the bottom of Bitcoin's price is? In short, I would not be surprised if Bitcoin fell to around $3,000 in 2018. Let me explain: I usually use the 200-week moving average historical data to analyze the bottom of the bear market, as shown by the yellow line in the figure below. Last Thursday (March 12), the price of Bitcoin fell to around $5,500.

Someone recently reminded me that I said in a 2018 CNBC interview that if the 200-week moving average is broken, then the real capitulation begins for the market.

In 2018 and 2019, Bitcoin did not actually break through the 200-week moving average, so we saw a nice rebound in the market afterwards. Just last week, Bitcoin fell below the 200-week moving average and closed below $5,500, which means that the former support level has now become resistance.

Fortunately, Bitcoin once broke through the 200-week moving average and recovered successfully. The figure below shows the price trend of Bitcoin from August to November 2015. The market struggled for a full 6 weeks before breaking through and starting the next bull market.

Yet 2020 has been tougher than 2015 for a variety of reasons. Let’s face it, the world has a lot more trouble than Bitcoin hitting bottom.

I think the next real strong support level for Bitcoin should be the bottom of the last bear market, which is the low of $3,000. Last Thursday, some Bitcoin futures were priced around $3,000. If there is more bad news in the world in the future, Bitcoin will not be immune.

However, if the world stabilizes, I expect Bitcoin, Ethereum, and other high-quality crypto assets to recover very quickly. But before that, we still need to find a way out of the tunnel.

I am not against dissenting opinions, and I welcome your own analysis. After all, I am a long-term investor, not a professional trader. I am also looking for Bitcoin production analysis, current network data, and marginal costs of new generation equipment. What I describe in this article is just the "technical bottom", and the marginal cost of production refers more to the "basic bottom". There may also be problems such as not considering the difficulty adjustment of the Bitcoin network.