When the price of Bitcoin bottomed to about 85 percent, some people thought that was it for Bitcoin.
However, it now sits at $5,308 which has vindicated the previous call on Bitcoin's bottom down. Meanwhile, it is still believed that a black swan might occur. If this happens, Bitcoin along with other cryptocurrencies could experience a free fall.
Adamant Capital which is an Alpha-seeking Bitcoin fund previously published their latest report on the cryptocurrency market.
The report was entitled "Bitcoin in Heavy Accumulation" where it was mentioned that Bitcoin is already in a bullish market. However, it also pinpointed the low cycles of the cryptocurrency.
Four cases were introduced with regards to the new lows of Bitcoin that could potentially come in the near months.
Failures of infrastructure providers and crypto exchanges came first. Much of the unwinding of the Bitcoin world was caused by natural cycles. However, some of the pressure was catalyzed by the decimation of Mt. Gox where thousands of BTC were hacked.
Adamant Capital theorizes that if a similar event were to take place in the next six months, people would most likely witness a negative scale in the demand for Bitcoin.
The report also mentioned a macroeconomic crash.
It is believed that cryptocurrencies are a type of asset that is completely separated from stocks. However, based on Adamant Capital's report if the traditional market collapsed, this could make way for a situation that is similar to the 2008 paradox wherein the price of gold fell to 30 percent when there was a surge in the demand for this commodity.
If this situation was to be replicated in the crypto market, people might see the price of cryptocurrencies fall despite the interest of investors in the digital currency.
According to the report, Bitcoin mining capitulation can also take place. Adamant noted that this type of event had already occurred in the past with Bitcoin miners. However, if the price of Bitcoin was to go down to $3,000 again, this could trigger a Bitcoin mining capitulation for the second time.
Despite the postulates Adamant Capital has presented, the report states that Bitcoin has already bottomed. There were clear signs that Bitcoin is in accumulation mode.
The Bitcoin Unrealized Profit/Loss (BUPL) Indicator is an apparatus that aims to determine the number of Bitcoins that holders are continually losing or gaining.
In the report of Adamant Capital, the BUPL was said to have read $13 billion in the positive. However, when the BUPL is adjusted to read the number of lost coins, it would get a reading of $3 billion which means that there are approximately 3 percent coins that are lost.
Adamant Capital explains that the BUPL measures aren't all that important. However, they are needed to pinpoint that Bitcoin had already exited the capitulation stage. Now, the cryptocurrency is about to enter a stage of hope and fear.