Bitcoin Surge Parallels Price Action in 2019: Analyst

Vetle Lunde, cryptocurrency markets analyst at K33 Research, sees similarities between bitcoin’s recent rally from the 2022 recession and its price pattern from 2018 to 2019.

In an interview with CoinDesk TV’s “First Mover” Monday, Lunde said that “the current phase of decline and recovery is remarkably similar to that of 2019, both in terms of duration and price action.”

In a research note to clients last week, Lunde wrote that bitcoin could reach $45,000. BTC is currently trading at around $29,440, down 2%, although it is up about 80% in 2023. The recovery came after a year of turmoil, as several major companies declared bankruptcy, sending timid investors fleeing the currency markets. encrypted.

“We’ve seen over the latter part of 2022 a lot of forced selling, as well as selling from investors who have become cautious,” Lundy said. This has put people at risk. It has also tempted a lot of people to shorten (crypto) being conservative with added exposure. This creates this dynamic where Bitcoin feeds off your short squeeze and moves higher. “

He added that negative-to-neutral selling of derivatives, despite recent price gains, were further signs of investor caution. This sentiment may change, although the market’s relatively low liquidity remained a potential weight on future prices.

Lunde believes that last week’s weak signals that the US central bank will ease its monetary tightening amid moderately encouraging inflation data could boost market sentiment.

He blamed weak cryptocurrency prices last year in part on companies overexposing themselves when interest rates were zero.

“It was a lot of spending, a lot of focus on growth,” Lundy said. “So you had this environment where miners took a lot of securities that held a lot of bitcoin and then had a price drop, plus all the crypto banks started to neglect their due diligence.”

But Lunde noted that the 2022 industry-wide crisis, which saw several large companies declare bankruptcy, including crypto hedge fund Three Arrows Capital, had already benefited markets by eliminating bad actors. “A lot of these rotten fruits were swept from the market,” he said. “So the whole market is in a more robust phase right now where it can handle higher interest rates for a longer period.”

He added, “The industry has learned. I’m sure we’ll have similar types of crises in the future, unfortunately. But for now, those kinds of risks seem to have been taken out of the market. So the market feels a little safer for the time being.”