Analyst: BTC bottom is coming soon and the second half of the year will usher in an optimistic outlook

Author: Krisztian Sandor, CoinDesk; Compiler: Wuzhu, Golden Finance

• BTC has been on a downward slide since hitting an all-time high in March.

• Santiment said Friday's rapid decline showed weakening interest from bargain hunters, suggesting the bottom could be near.

• Bitfinex analysts said the calm could last until early summer, creating a very optimistic outlook for the second half of the year.

The cryptocurrency market has been caught in a lull in digital asset consolidation over the past few weeks, testing investor confidence in whether the bull run will resume.

All attempts to sustain gains over the past few weeks have been met with sell-offs, the latest example being Friday’s plunge of nearly 5% from $63,000 to just over $60,000 on dismal inflation expectations and hawkish comments from Federal Reserve policymakers.

Blockchain activity also indicates low participation, with a sharp drop in transactions on the Bitcoin network and inflation on the second-largest Ethereum (ETH).

We’ve been through phases like this before.

The current period resembles the movement from April to September 2023, when Bitcoin languished in the $25,000 to $30,000 range for six excruciating months. Eventually, the cryptocurrency was able to sustain its gains for several months, with Bitcoin finally hitting a new all-time high in March of this year.

“Bitcoin is in the ‘bored to death’ phase,” Charles Edwards, founder of cryptocurrency hedge fund Capriole Investment, said in an X post on Thursday.

He explained that this consolidation period could last from one to six months, during which Bitcoin will fluctuate in a low-volatility range until market participants lose patience. He added that until the consolidation ends, market sentiment will be most negative.

“When you get tired enough of the sideways movement, common views include thinking the halving is priced in, the bull run is over, and selling and buying stocks at the bottom,” Edwards said. “Your symptoms and shorts will peak before the big move higher.”

Analysis firm Santiment said the bottom may be near.

“Traders are showing ‘buy the dip’ interest in Bitcoin’s latest pullback,” Santiment said Friday while monitoring social media interactions. “Generally speaking, a lack of confidence from the crowd is a strong signal that prices are near a bottom.”

Bitcoin’s recent weakness has come amid a surge in the dollar and waning expectations of rate cuts, and said the calm could last until early summer.

“We expect that in a low volatility environment, there will remain uncertainty in the market in the short term until the actual tapering of QT (quantitative tightening) in June.” The Federal Reserve announced plans to curb the pace of balance sheet reduction from next month, which will affect the liquidity of the US dollar, thereby benefiting risky assets such as cryptocurrencies that are sensitive to the global liquidity environment.

However, the dollar fell from last week’s six-month high after the Fed meeting and the weak jobs report, coinciding with Bitcoin’s rebound from nearly $56,000, which is a turning point in the trend. A weaker dollar may support the next stage of the cryptocurrency rally.

"We believe that Bitcoin's continued strength and recovery of range lows following the FOMC and job market data, along with concurrent USD weakness, is a fresh sign that will set us up for a very bullish stance on Bitcoin in Q3-Q4."