Bitcoin Bear Market Will Last ‘Maximum 2-3 Months’ — Interview with BTC Analyst Philip Swift

Bitcoin (BTC) may experience more pain in the near future, but the bulk of the bear market is already “likely” behind it.

That’s one of many conclusions from Philip Swift, the popular chain analyst whose data resource, LookIntoBitcoin, tracks many of the best-known Bitcoin market indicators.

Swift, who together with analyst Filbfilb is also one of the founders of the trading suite Decentrader, believes that despite today’s price pressure, it is not long until Bitcoin leaves its latest macro downtrend.

In a recent interview with Cointelegraph, Swift revealed insights into what the data is telling analysts — and what traders should pay attention to as a result.

How long will the average hodler have to wait for the tide to turn and Bitcoin to storm back from two-year lows?

Cointelegraph (CT): You have pointed out that some on-chain metrics like HODL Waves and RHODL Ratio suggest a BTC bottom. Can you expand on this? Are you sure history will repeat this cycle?

Philip Swift (PS): I think we are now at the point of maximum opportunity for Bitcoin. There are many key numbers on LookIntoBitcoin that indicate we are at major cycle lows.

We see the percentage of long-term owners peaking (1 year HODL Wave), which usually happens at the depth of the bear market, as these long-term owners do not want to take profits until the price moves higher.

This has the effect of limiting the available supply in the market, which can cause prices to increase when demand eventually kicks in again.

We’re also seeing metrics like the RHODL Ratio dip into their accumulation zones, showing the extent to which euphoria has now been drained from the market. This removal of positive sentiment is necessary for a bottom area to form for BTC.

The RHODL Ratio highlights that the cost basis of recent Bitcoin purchases is significantly lower than the prices paid 1-2 years ago when the market was clearly euphoric and expected +$100k for Bitcoin. So it is able to tell us when the market has reset in preparation for the next cycle to start.

CT: How is this bear market different from previous BTC cycles? Is there a silver lining?

PS: I was around for the 2018/19 bear market and it actually feels pretty similar. All the tourists have left and you only have the committed passionate crypto people left in the room. These people will benefit the most from the next bull run – as long as they don’t go crazy trading leverage.

As for silver linings, I have a couple! First, we are actually a fair way through the market cycle, and probably through the majority of this bear market already. The chart below shows Bitcoin performance every cycle since the halving and we are already around the capitulation points of the previous two cycles.

Second, the macro context is very different now. While it has been painful for bulls to see Bitcoin and crypto so highly correlated with traditional markets struggling, I think we will soon see a bid for Bitcoin as confidence in (major) government crosses downward beyond a point of no return.

I believe this lack of trust in governments and their currencies will create a rush towards private “hard” assets, with Bitcoin a major beneficiary of this trend in 2023.

CT: What other key numbers on the chain would you also recommend keeping an eye on to spot the bottom?

PS: Be wary of Twitter personalities who show Bitcoin chain charts cut by exotic/strange variables. Such data very rarely adds any genuine value to the story shown by the most important key metrics, and these personalities just do it as a way to grab attention rather than actually trying to help people.

Two calculations that are particularly useful in today’s market conditions:

MVRV Z-score is an important and widely used metric for Bitcoin. It shows the extremes of the Bitcoin price moving above or below the realized price. Realized price is the average cost basis of all purchased Bitcoins. So it can be thought of as an approximate break-even level for the market. The price only falls below that level in extreme bear market conditions.

When it does, the indicator on this chart drops into the green “accumulation” zone. We are currently in that zone, which suggests that these could be very good levels for the strategic long-term investor to accumulate more Bitcoin.

The Puell multiple looks at miner earnings versus their historical norms. When the indicator dips into the green accumulation band, as it is now, it shows that many miners are under significant stress. This often happens at major cycle lows for Bitcoin. This indicator suggests that we are close to a cycle low for Bitcoin if we haven’t already bottomed.

CT: Your fellow analyst Filbfilb expects BTC to reverse course in Q1 2023. Do you agree?

PS: Yes I do. I think traditional markets are likely to have a bit more decline in early 2023. At worst, I see crypto having a tough time until then, so probably another 2-3 months max. But I think the majority of fear will soon switch to governments and their currencies – rightly so. Therefore, I expect that private assets such as Bitcoin will surpass in 2023 and surprise many of the domain that say that Bitcoin has failed and will come to zero.

Related: Bitcoin Analyst Who Called 2018 Bottom Warns ‘Bad Winter’ Could See $10K BTC

CT: October is a historically bad month for stocks – not so much for Bitcoin. How long do you expect BTC to be locked in with risky assets and what will be the catalyst?

PS: Bitcoin has been a useful forward-looking risk indicator for the markets through much of 2022. What will change in 2023 is that market participants will appreciate [that] most of the risk actually lies with authorities, not with traditionally defined “risky” assets. As a result, I expect a narrative shift that will benefit Bitcoin next year.

The actions of the UK government over their mini budget two weeks ago were a key turning point for that potential narrative shift. The markets showed that they were prepared to show their disapproval of bad policies and incompetence. I expect the trend to accelerate not only for the UK but also in other countries.

CT: Are you surprised by Ethereum’s poor performance after the merger? Are you bullish on ETH in the longer term with its supply burning mechanisms?

PS: [Ether] (ETH) had a strong short-term narrative with the merger, but it was within the context of a global bear market. So it is not surprising that price performance has been weak. In the end, general market conditions dominated, which was to be expected.

In the long term, however, Ethereum is set up to do exceptionally well. It is a critical component of Web3, which is growing exponentially. So I am very bullish on Ethereum for the next couple of years.

CT: What is the best jurisdiction for a Bitcoin/crypto trader today?

PS: A place that is low-tax and crypto-friendly. I personally think Singapore is great and there is a growing crypto scene here which is also fun. I have friends who are in Bali, which also sounds good and is cheaper.

CT: Anything you want to add?

PS: Resist any temptation to exit crypto near the bottom of the bear market. Just be patient and use some good tools to manage your emotions.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade involves risk, you should do your own research when making a decision.