Bitcoin is losing ground for the second day, but the volatility remains very low—nothing new is happening.
Such consolidation can technically become a harbinger of a surge in volatility, but for now it can be used by market participants to accumulate. At least that's what some crypto analysts think.
Crypto analyst and trader Jason Pizzino draws the attention of the crypto community as he sees signs that the main cryptocurrency is currently in an accumulation phase.
Pizzino notes that based on the market-value-to-realized-value (MVRV) ratio, BTC may only have a few months left in a late-stage bearish accumulation zone.
"We may only have five months left of Bitcoin being underneath this [MVRV accumulation] zone which in the past has called for some pretty good buy opportunities before the market starts to accumulate at higher prices, like it did in 2015 and again in 2019 and 2020 and then go on to those next bull markets."MVRV values below one indicate a serious market capitulation and that accumulation continues. Bitcoin's MVRV ratio, as of writing, is below 0.85.
Is an even greater fall possible?Pizzino also offered his opinion on whether Bitcoin could fall below the 2022 low of $15,600:
"It can be easy for many investors to be left behind because they're expecting lower and lower prices. But a lot of the data is showing that if we haven't hit that exact price bottom on Bitcoin, we're probably somewhere around it."According to Pizzino, the top cryptocurrency could bottom between $13,000 and $14,000 if resistance at $18,500 is strong.
"We want to see whether Bitcoin is going to test those upper prices, first hit that $18,500, that's going to be a key level. I think if we break that then we'll probably put in a higher low around that March-April period. But if we don't, if we're unable to get past that $18,500, then we'll probably put in some sort of lower low. How far down? That is anyone's guess. But if we're using some of the probabilities and looking back on the chart, looking at history, then we would have to say that it's going to be somewhere around that $13,000 to $14,000, which has held the market up in the past." The crypto scandals are not over—get readyMeanwhile, looking ahead to 2023, crypto investor Mark Cuban believes that trading cryptocurrency tokens on centralized exchanges will cause the next "implosion" in the market.
The investor opined that there will be no shortage of crypto scandals in 2023 after the numerous fiascos that rocked 2022.
Cuban, who has backed several cryptocurrency and Web3 startups, said he believes the next major factor to impact the industry will be "the discovery and removal of wash trades on central exchanges."
"There are supposedly tens of millions of dollars in trades and liquidity for tokens that have very little utilization," he said before adding, "I don't see how they can be that liquid."What is wash trading on crypto exchanges?Wash trading, which is illegal under U.S. law, is the process whereby a trader or bot buys and sells the same crypto asset in order to feed misleading information to the market.
The goal is to artificially inflate volumes so that retail traders join in the win and push prices higher. Basically, it's a pump-and-dump scheme.
Cuban stressed that he was just making a prediction, adding, "I don't have any specifics to offer to support my guess."
According to a December report from the National Bureau of Economic Research (NBER), up to 70% of the volume of unregulated exchanges comes from wash transactions.
The researchers used statistical and behavioral models to determine which transactions were legitimate and which were bogus.
In addition, a 2022 Forbes study of 157 centralized exchanges found that more than half of Bitcoin trading volumes were fake.
However, fictitious trading is not limited to centralized exchanges. On January 5, Quantum Economics CEO and former eToro senior market analyst Mati Greenspan said that 42% of all NFT volume comes from wash trades.
He added that wash trading is also being used to collect tax losses, giving the impression (to the tax officer) that the losses were greater than they actually were.