Renowned technical analyst and head of Factor LLC, Peter Brandt, cast doubt on the near-term rally in the price of the first cryptocurrency.
The trader challenged ‘Bitcoin historians’ to name even a single precedent in the last decade when digital gold set a new high after a more than 50% drop.
He also proposed identifying another instance when such a correction did not lead to at least a 70% drop in the BTC price within seven months.
Challenge to $BTC price historians
In past 10 years (since May 2011) please identify a single (even one) instance:
1. When a 50%-plus correction did not lead to at least a 70% correction
2. When a 50%+ correction made a new ATH within 7 months— Peter Brandt (@PeterLBrandt) June 1, 2021
One user provided two examples:
- Bitcoin broke through the $20,000 mark almost nine months after a drop to $3,800 in March;
- the 2013 rally, during which the price of digital gold rose 2,450% in eight months after hitting a bottom at $45.
Brandt dismissed these examples, arguing that in both cases the cryptocurrency required an extra month to reclaim its former highs.
Analyst Willy Woo suggested the trader is attempting to forecast a further market downturn, based on how Bitcoin responded to past 50%-corrections.
All drops of that scale with long recoveries was from a starting point where price was over extended above fundamental valuation.
This setup is different in that price is BELOW fundamentals.
As a guide, the COVID dump dropped below fundamentals and therefore recovered quickly.
— Willy Woo (@woonomic) June 1, 2021
In Woo’s view, Brandt is using the wrong approach. He noted that all corrections of this scale followed by long recoveries began at a point when price was above the asset’s fundamental value.
«This setup is different in that the price is below fundamentals», — said Woo.
He later clarified that to assess fundamental value one can use the Stock-to-Flow model and the NVT indicator.
Comments asking for expansion of “fundamental valuation”.@100trillionUSD‘s S2F using scarcity valuation of the network is approx $60k while NVT Price using investor volumes puts value at $54.5k.https://t.co/5nvXnRYXHY
— Willy Woo (@woonomic) June 1, 2021
In September 2020, Brandt said he had closed positions in stocks and currencies, and had sold bitcoins on the eve of the drop.
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