Top analysts are split on the way forward for the crypto market. 

In a recent interview with CNBC, Fundstrat’s Tom Lee remained confident that the crypto market could see a relief rally.

Lee, who also doubles as the chairman of the world’s largest Ethereum treasury firm BitMine Immersion, said everything was in place for the crypto market to bottom. 

“Tom deMark, BitMine crypto advisor, has been waiting for time and price to align, $77K for BTC and $2400 for ETH. So all the pieces are in place for crypto to be bottoming right now. As long as crypto fundamentals are good, recovery should be in place.”

According to him, the decline in crypto was expected following the announcement and confirmation of the Fed’s new chair.

But he added that the extent of the crypto market sell-off was “more than expected,” noting that it had no ‘leverage’ right after the October 10 de-leveraging event. 

BTC dropped 11% last week, falling from $90K to $75K. It bounced back slightly to $78K at the time of writing.

For Galaxy’s head of research, Alex Thorn, however, the crypto asset could post more losses due to ‘lack of near-term catalysts.’

In a recent note to clients, Thorn wrote, 

“Onchain data, weakness at key price levels, macro uncertainty, and a lack of near-term catalysts suggest BTC will trade lower towards the 200-week moving average over the next weeks or months.”

Currently, the 200-week Moving Average (MA) sits around $50K, and Thorn added that this level has been a key buying area in the past. 

“If Bitcoin falls lower towards the 200-week moving average or the realized price, these levels should present strong entry points for long-term investors as they have in the past.”

Interestingly, some whales with over 1000 BTC were already jumping on discounted prices to add positions, Bitfinex noted. 

On his part, Aurelie Barthere, principal research analyst at Nansen, a crypto analytics platform, also shared a bearish outlook similar to Thorn’s. He cited potential changes if Kevin Warsh is confirmed as the new Fed chair.  

In an email statement, Barthere told AMBCrypto, 

“Changing the Fed’s operating regime and reducing the balance sheet will not be straightforward (the Committee needs to be convinced), but I think markets are starting to price in a small probability of QT (quantitative tightening) resumption. This is bearish crypto.”

Meanwhile, the 2021 cycle also rhymed with the current price action, with fractals (blue line) suggesting that BTC could slip to $70K. This was the peak of the past cycle, and past bear markets tend to stabilize around previous market cycle tops. 

• Fundstrat’s Lee said the crypto market bottom formation could be likely as ‘all conditions’ were aligned. 
• Still, macro headwinds and the close resemblance between the 2021 pattern and current price action called for extra caution.