The cryptocurrency market makes final preparations before the next bull run, suggests a new report by the Adamant Capital.
“Now, at 75% below its 2017 all-time high, we believe the current bear market represents an exceptional opportunity for value investors,” claim co-authors Tuur Demeester and Michiel Lescrauwaet in their paper.
The firm forecasts Bitcoin price to settle between $3,000 and $6,500. It also claims that in November 2018, the asset has “capitulated” as the retail investors fled the market, making BTC price falling by 48%.
Relative unrealized profit and loss is a key metric, which reportedly indicates an upcoming market trend. This movement was admittedly driven by a fast and sudden increase of BTC price from $4,000 to $5,000, triggering an Unrealized P&L point for HODLers.
Meanwhile, speculators significantly reduced activity on the bitcoin market. Their exile is marked with the lowered volatility being a mark of their exile:
“High Bitcoin volatility can be a proxy for the involvement of trigger-happy retail speculators, whereas low volatility tends to coincide with phases of consolidation, apathy, and accumulation,” the report explains.
At the same time, long-term HODLers followed speculators as they had sold off assets in November 2018, due to the panic occurred after the price dipped below $6,000, holders panicked and sold off coins. From November 14 to 16, over 70,000 Bitcoin days were destroyed, which was the biggest move of old bitcoins since February 23 of that same year.”
By an early 2019, the market sentiment improved, highlighting the parallels that can be drawn with previous bitcoin market cycles.
“We can see that the 2018 drawdown of 84% from the all-time high is on par with drawdowns from previous cycles (-92% in 2011 and -85% in 2014-15). In our opinion, the parallel with previous cycles is sufficient to validate our thesis that we are back in undervalued territory,” says the report.
Demeester and Lescrauwaet believe the latest fallout of the market is due to the consistent transition of Bitcoin price to lower volatility and smaller cycles.
Notably, the Adamant Capital’s previous reports, published in 2012 and 2015, considered Bitcoin as a highly undervalued asset.