Bitcoin expected to experience its largest quarterly decline in over a decade

30 Jun 2022 , 01:37 PM

As increasingly hawkish central banks and a succession of high-profile crypto blowups crush sentiment, bitcoin is on track for its worst quarter in more than a decade.

The worst decline in the largest cryptocurrency since the third quarter of 2011, when Bitcoin was still in its infancy, is 56%.

Between those milestones, there were multiple booms and busts, with the value of cryptocurrencies rising as they became more widely used and historically low-interest rates encouraged risk-taking. The amount of cryptocurrency leverage that has been unwound, however, makes the present bear market stand apart, as does the regulatory scrutiny being applied to an asset class that many central banks now view as a threat to financial stability.

On Thursday morning in London, Bitcoin fell 1% to trade slightly below the $20,000 mark. A few cryptocurrencies performed worse, with Solana and Polygon plunging by about 6%.

The constant stream of negative news serves as a stinging rebuke to the crypto industry’s mentality of unrestrained speculation and unconstrained innovation: When a token that was intended to be tied to the US dollar failed, it almost immediately lost all of its market value, amounting to over $40 billion. A number of cryptocurrency lenders had to stop accepting withdrawals, leaving depositors helpless. And most recently, a well-known cryptocurrency hedge fund was forced into liquidation after taking on too much debt to support its investments.

Despite the worst predictions, some analysts believe that the bottom may be in sight. According to a note released on Wednesday by
JPMorgan Chase & Co. strategists including Nikolaos Panigirtzoglou, the deleveraging that intensified the rout in recent months may not have much more to go. They also cited the “continuing at a healthy pace in May and June” venture capital funding.

According to Fundstrat technical strategist Mark Newton, “Bitcoin has had good success over the last 12 years at making cyclical lows every 90 weeks.” According to this cycle composite, lows should be imminent. As sentiment appears to be shifting toward the downside, traders should be vigilant in July and attempt to purchase weakness for a strong rebound.