Is the Lowest Point for Bitcoin Reached? Leading Analyst Gives 91.5% Chance

Is Bitcoin at Rock Bottom?

Crypto analyst Miles Deutscher has made a bold prediction, claiming there’s a 91.5% chance that Bitcoin is at its lowest point. In a recent post, he expressed his confidence: “I’m 91.5% sure we’re in Bitcoin’s bottom zone. If that’s the case, a lot of people will be caught offside.”

Deutscher outlines four key “pillars” that support his analysis: the market’s reaction to news, patterns in historical Fear, Uncertainty, and Doubt (FUD) events, changes in market flows, and an improving global liquidity situation. His internal model assesses these factors and yields a positive outlook of 91.5 out of 100.

First off, he examines price trends and recent headlines. He pointed out that during the past few days, the market has been processing a wave of negative news, including renewed Tether FUD, updates on China’s crypto regulations, MicroStrategy’s strategies, and concerns about the Bank of Japan’s yen carry trade unwinding. Remarkably, he observed that despite this barrage of bad news, Bitcoin’s price actually rose. He found this significant, noting that it’s the first instance during this prolonged decline where Bitcoin reacted positively to adverse news. He highlights a classic trading saying: “The reaction to the news is more important than the news itself.”

The second pillar focuses on how clusters of bad news often align with local price lows. Deutscher did a backtest that included events related to Tether, China, the Bank of Japan, and MicroStrategy. His findings suggest that each of these incidents indicated a potential bottom. He assigns a full score of 28 out of 28 to this pillar, although he acknowledges this factor alone isn’t definitive. Still, it contributes significantly when paired with the first pillar, creating a more compelling bullish case.

The third pillar looks at market flow, which he describes as the most crucial element, considering buying and selling pressures. He noted that for the last few weeks, flows were notably negative, chiefly due to selling by original investors and ETF offloads. However, he sees recent signs of stability, with ETF inflows starting to recover, Treasury holdings steady, and the aggressive selling by original investors slowing down. This analysis gives a score of 22.5 out of 25 to this pillar. He adds an important note that while conditions are improving, risks still remain.

The fourth and final pillar deals with liquidity and the broader macro landscape. Deutscher remarks that while market liquidity has been tight, it’s beginning to improve, with global financial conditions easing. He points out that shifting macroeconomic trends, especially with a potentially more dovish Federal Reserve leadership, mark the end of quantitative tightening. This aspect earns a score of 9 out of 10 in his framework.

When combined, these four pillars yield a headline score of 91.5 out of 100. However, Deutscher offers a caveat: U.S. markets are currently on a significant upswing and may require some cooling. He notes that risks related to market sentiment and ETF flows persist, which could shift in any direction. His conclusions are more about probability than certainty. “The market is a game of probability, and given the extreme FUD we’ve faced and how the market has reacted, I think the odds favor the bottom.”