As a result of the lawsuit filed by the Commodity Futures Trading Commission (CFTC) against the world’s largest crypto exchange Binance, the Bitcoin market is currently experiencing a high level of uncertainty. After yesterday’s 5% crash within an hour, the BTC price is currently struggling to make it past the $27,000 mark, yet Bitcoin is up 63% year-to-date.
BTC Repeating The Price Action Of Late 2019?
Analyst @tedtalksmacro sees many parallels in the current price trend and macroeconomic environment to the period from September to November 2019, when the Bitcoin price consolidated between $10,500 and $6,500. “Just like every other Bitcoin cycle, the current one has its nuances,” notes Ted, who sees the first similarity in the US Federal Reserve’s (Fed) interest rate policy.
In 2019, the Fed made three rate cuts by October. It also began expanding its balance sheet in September. The scenario is somewhat similar to today’s.
Currently, the Fed has already begun balance sheet expansion – according to the prevailing opinion of experts – with its Bank Term Funding Program (BTFP) and expanded swaps with five other central banks. Even though the Fed’s dot plot does not include any rate cuts in 2023, the market is calling it a bluff and is pricing in rate cuts of 100 basis points by the end of the year.
Bitcoin price trends are also similar. In 2019, the price had hit a bottom after moving 83% away from the all-time high (ATH). This was around 500 days before the next halving in 2020.
In 2023, the price bottomed after moving down 78% from its ATH. Like clockwork, the BTC price again found its bottom around 500 days before the 2024 halving.
“Consistencies between cycles are new ATHs, echo bubbles, bear markets and consolidation phases; each time these phases play out slightly differently for reasons other than price,” explained Ted, who shared the chart below.
Further, the analyst notes on the chart that the 2021/22 echo bubble was more intense due to the FTX collapse and therefore outperformed the 2018 echo bubble by a multiple. In addition, Ted speculates that the COVID black swan price action should not repeat this cycle unless another black swan, such as a third world war, occurs. In conclusion, he states:
If you’re betting on new lows from here, it’s becoming clear that you’re betting on this time being different (I’ll never speak in absolutes, but betting against history typically doesn’t work out well).
Similarities To 2020’s Bitcoin FUD
Renowned analyst Andrew Kang takes a similar view. In a recent tweet, he drew attention to the current similarities to the year 2020. The year 2020 was marked by numerous regulatory FUD history surrounding Bitcoin.
In October 2020, the CFTC opened its case against BitMEX and its founders. A short time later, the Chinese government attacked OkEX and Huobi. After a quick recovery, markets faced a barrage of regulatory FUD from US and Chinese regulators, as Kang notes.
The US government went after Arthur Hayes and Bitmex. The Chinese government went after OKX and Huobi executives. Markets could not break below $10k and climbed the wall of worry. “Markets could not break below $10k & climbed the wall of worry,” says Kang, who also wrote recently:
Global crisis, markets panicked, months of long positioning flushed out, only truly convicted holders remain, sellers in disbelief and traders ready to fade all rallies. Same playbook, just 3 years later.
At press time, the Bitcoin price was at $26,895, still struggling to shrug off the Binance news.