What’s next after Bitcoin sets a record for the worst Quarter since 2011
The second quarter of the year was a bloodbath for Bitcoin. The coin finished Q2 down by 56%, with a price drop from $45,000 to $19,900, its worst quarter since Q3 2011. Bitcoin is currently experimenting with its $20k level, which is a critical zone.
Bitcoin Experiences a Historic Drop
During June, Bitcoin fell by 37%. But it’s not just the numbers that have been depressing. June also saw the predictable rejection of Bitwise and Grayscale spot-based bitcoin ETF applications, which was immediately followed by Grayscale’s promised lawsuit. Furthermore, the effects of Terraform Lab’s UST stablecoin and Three Arrows Capital collapses appear to have spread among crypto firms: Vauld, another crypto lender and trading platform suspended all withdrawals, trading, and deposits, citing current market conditions’ “financial challenges.”
During the second quarter of 2022, Bitcoin began at $45,000 and fell to below $20,000 before regaining its key $20k price level just in time to close June above it. The coin needs to break above $20,500 and remain above $22,000 to clear any potential short-term downside risk. Overall, according to the most recent Arcane Research weekly report, this drop “marked a historic quarter for the bitcoin price, and we have to go back 11 years to find a more brutal quarter.” Bitcoin finished the quarter just under $20,000, down 56%.
What You Can Expect
However, the BTC price action may soon turn positive. Analyst Michael van de Poppe believes the coin will soon flip the $20K-20.4K key level and then “head towards $23K and the summer relief rally.” Today, he said the coin is “sustaining” and “looking ready for a big move relatively soon.” Bitcoin’s $20k level represents the peak of its previous bull run, and “technically speaking, the close of the monthly candle was positive,” with June’s closing price exceeding the 2017 peak. The report also suggests a support/resistance flip, in which “previous resistance will act as support.”
However, macroeconomic factors may be the ones to turn positive expectations around later. Global uncertainty continues to exert pressure. The S& P 500 is down 20% from its January high, which includes Bitcoin. Deutsche Bank AG Chief Executive Christian Sewing believes there is a 50% chance of a global recession, and other large banks agree. A recession of this magnitude could last several quarters.
Bloomberg reported on the current effects of inflation rates, noting that the gauge for the US is already 12.2 percent, comparable to levels seen at the start of the pandemic and in the aftermath of the 2008 financial crisis. The risk of a self-fulfilling recession and one that could happen as soon as early next year, wrote Anna Wong, the chief US economist at Bloomberg Economics. Even though household and business balance sheets are strong, concerns about the future may cause consumers to withdraw, causing businesses to hire and invest less. Similarly, the feared self-fulfilled recession could paint a bleak picture for the crypto market. During economic downturns, high-risk assets are expected to see investor retraction, which can lead to panic selling and higher prices.