Bitcoin (BTC) bulls have continued to lose grip heading into Wednesday. As of the time of writing this, BTC sits at $7,750, up by $300 from Tuesday’s $7,450 low. Despite this recovery, some analysts are still leaning bearish, expecting for cryptocurrencies across the board to continue to slump lower to begin a much-needed bout of consolidation.

From Capitulation to Greed: Bitcoin Poised to Head Lower

After weeks of nonstop upward price action, Bitcoin bulls have begun to relent. While there have been some optimists, claiming that BTC’s parabola remains intact, bears have begun to dominate the feeds of Crypto Twitter and industry forums.

Related Reading: Peter Brandt Bearish After Bitcoin Breaks Bullish Trend, Expects Further Reversal

In a recent tweet, legendary Bitcoin investor Trace Mayer noted that the Mayer Multiple, which is calculated by putting BTC’s current price over its 200-day simple moving average (currently $4,595), is showing that the market is still “slightly frothy”. More specifically, the multiple is reading a 1.82, the highest this indicator has been since early-2018, which was when BTC was trading well above $10,000. (It is important to note that according to Mayer’s simulations, accumulating when the multiple is under 2.4 produces the “best long-term results”.) With this in mind, the American investor, an anti-establishment figure that is an angel/early-stage investor in Kraken and Armory, added that he expects for the multiple to undergo a “gentle retreat” to anywhere from 1.4 to 1.6, which would result in prices of anywhere from $6,500 to $7,500. From there, a Mayer would be healthy. A move to $7,000 from current levels would see BTC fall another 11%, cementing a short-term bearish reversal in the eyes of analysts.

is at slightly frothy 1.82 & 200DMA at $4,595; rising about $10/day. Gentle retreat to 1.4-1.6 would be range around $6,500-7,500 for consolidation. Interesting coincidence with latest letter who comes from different point & reasoning. ? — Trace Mayer (@TraceMayer)

Mayer isn’t the only prominent investor to have called for further downside, despite the fact that a 17% drawdown in a week’s time is already harrowing enough. Responding to the observation about the Mayer Multiple, Tuur Demeester, a partner at Adamant Capital that called the bottom of (this and) the last cycle, noted that his team is “cautious”.

Citing a seminal report that Adamant released prior to Bitcoin’s rally past $4,000, $6,000, and $8,000 in rapid succession, Demeester explains that his firm’s indicators now read “greed” after “capitulation”. As the entire cryptocurrency industry learned during 2017/2018’s blow-off peak, copious amounts of greed often signal the top of bullish trends, as this market has begun to move against the sentiment of crowds.

Indeed, we are cautious at these levels for Bitcoin, as our indicators have gone from "capitulation" to near "greed" in only 6 months time. — Tuur Demeester (@TuurDemeester)

As to where Bitcoin could head from $7,700, Adamant’s researchers and partners don’t have a conclusive answer. They do have two theories though.

Firstly and most likely, Adamant writes that “should $9,000 prove [to be] the top”, which has seemingly occurred with Monday and Tuesday’s bull-scaring price action, a 2012-esque correction could be seen. This would result in Bitcoin trading in a range “between $6,800 and $7,680”, which is a 27% to 44% retrace of the upside rally.

Related Reading: Bitcoin Plunges Under $8,000 In Expected Pullback, Bulls are Showing Exhaustion

Secondly and less likely, Bitcoin could see a larger retrace, which would bring BTC to $5,600. The reason why this could occur is that in 2015, there was a large “upward move” in the Relative Unrealized P&L indicator, which coincided with a peak in capital flight from China, then a 70% retrace of the rally. With the conditions seemingly being the same — it is believed the U.S.-China trade war has catalyzed Bitcoin’s strong price action — this sequence of events is surely on the table.

Long-Term Potential Still Intact

Although Mayer is seemingly calling for a short-term retracement, he is still absolutely sure that in the long run, Bitcoin is going to do just fine and dandy. For those unaware, Mayer, like many others in the cryptocurrency community, is a diehard believer in the fact that traditional banking, not Bitcoin, is in a vicious death spiral. Earlier this year, he reminded cryptocurrency investors that society at large has accumulated $87 trillion worth of debt since 2008’s Great Recession, accentuating that everyone from those in government to common Joes and Jills hasn’t learned from past mistakes.

With Bitcoin having an artificial supply cap of 21 million coins and (arguably) better characteristics than gold, the world’s best form of money for millennia, many have been inclined to state that BTC is an “escape hatch” from macroeconomic turmoil. And with the geopolitical tumult, Bitcoin might be used sooner than we expect.

Related Reading: Why Analysts are Adamant Bitcoin Rally is Just Gettin’ Started After 130% Gain

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