An indicator tracking transactions in profit and loss is yet to repeat its traditional bear market bottom sequence, says CryptoQuant.
Bitcoin (BTC) may not be good value enough for a macro price bottom, according to analysis from CryptoQuant.
In a blog post on Dec. 29, a contributor to the on-chain analytics platform flagged one BTC price indicator with further to fall.
Profitability indicator lacks key cross
At nearly 80% below all-time highs, BTC/USD is nearing the zone in which it bottomed during previous bear markets.
As CryptoQuant’s MAC_D notes, there is no shortage of instruments pointing to the 2022 bear market bottom already forming.
Despite this, however, the signs are not yet unanimous, and pointing to transactions in profit and loss, he warns that cheaper BTC prices may still enter.
CryptoQuant’s unspent transaction outputs (UTXOs) in profit and loss indicator currently shows around 30% of transactions performed at a loss.
“When the UTXOs in Profit and Loss indicators were crossed, the floor was formed during the past three BTC Halvings,” MAC_D explains.
Currently, however, this indicator does not show a cross, and does not show that the BTC is undervalued.”
An accompanying chart shows previous crosses occurring only rarely — in June 2016 and May 2020. The latter came in the aftermath of the COVID-19 cross-market crash in March of that year, and also coincided with Bitcoin’s latest block subsidy halving event.
“It will provide a clear buying timing when the cross is generated,” MAC_D concluded.
“Therefore, the BTC is likely to fall further, and spot hedging and down trend trading are required.”
Max pain yet to come, say traders
CryptoQuant is far from alone when it comes to concerns that BTC price action may get worse before it gets better.
Related: Bitcoin low volume sparks BTC price warning as metric hits ‘value zone’
Among popular traders, various theories call for a much deeper bear market bottom than current spot prices, this potentially coming in at $10,000 or lower.
As a potential silver lining, Q1 2023 should see the start of a recovery, with $22,000 even acting as a magnet for bulls later on.
BTC/USD is trading below $16,500 at the time of writing, data from Cointelegraph Markets Pro and TradingView shows, having hit its lowest levels in over a week before the start of the final Wall Street trading session of the year.
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