Bitcoin’s sharp sell-off may have finally run its course, according to Geoffrey Kendrick, head of digital asset research at Standard Chartered, who maintains that the pullback is following a familiar pattern and is likely about to run out of steam.
bitcoin fell below $90,000 on Tuesday, extending a decline that has erased nearly 30% of the coin’s all-time high above $126,000 set in early October. The latest drop marks the deepest pullback since last year’s introduction of spot bitcoin ETFs in the US, and has sparked debate over whether the largest cryptocurrency is entering the bear market phase of its typical four-year cycle.
“I view the recent sell-off as nothing more than (a rapid/painful version of) the third in recent years, of almost exactly the same magnitude,” Kendrick wrote in a Tuesday note to clients.
As part of his thesis, Kendrick highlighted key sentiment and valuation metrics that have now reset to levels historically associated with market lows. One of them is bitcoin treasury Strategy’s (MSTR) modified net asset value (mNAV), an indicator of the company’s bitcoin holdings relative to its share price, which has fallen to parity at 1.0.
“A number of other metrics have collapsed to absolute zero levels,” he said, suggesting seller exhaustion and capitulation. “This is enough to indicate that the liquidation has ended.”
“My base scenario is a rebound towards the end of the year,” he concluded.
His perspective echoed recent comments from analysts at crypto exchange Bitfinex. They noted that the pace of losses realized by short-term holders began to slow with the appearance of signs of chain capitulation, typical markers of the formation of a bottom in the market.
BTC rebounded to just $93,000 on Tuesday, up 3.8% from overnight lows.
