The ongoing crypto winter has hit cryptocurrency prices hard and bitcoin is no exception. Since August 15th bitcoin has lost around 20% of its value and continues to hover around $19,000; but the crypto winter is not the only factor leading to the bitcoin price drop. The unsavory inflation report and more than half of BTC coins being held at a loss, gave the bears the advantage last week. 

Inflation report

On Tuesday, President Biden celebrated the inflation report results that showed inflation dropped from 8.5% to 8.3%. Ironically during the festivity, the market reacted by sending the Dow Jones into a 1,200 point nosedive, the largest single-day loss in more than two years. 

As for bitcoin, it started to tumble 12% during the President’s speech; dropping from a month-long high of $22,539 to $20,124 in just ten hours – the biggest one-day drop this month. The inflation report sent all risk assets into a tailspin as consumer prices remain high. 

Bitcoin price

Bitcoin price action has been sliding since mid-August, falling below $19,000 in the early hours of Sept. 19th, and again the morning of Sept. 20th. Bitcoin has not seen an $18,000 price point since November 2020.

Bitcoin analysts such as Willy Woo and Crypto Ed have stated their belief that the bottom is not in yet. Woo believes that the bottom will hit when BTC touches $17,600; this is based on chart correlations to previous bear markets. 

On-chain analysis

One of the largest bear markets in bitcoin price history was in December 2017 when the price dropped from $19,000 to $11,000 between Dec. 17-22. That week saw three major drops before lows started to rise. Back then, 60% of BTC was held at a loss; today, 52% are underwater.

Image, courtesy: Messari.io

If the correlation to this previous bear market is to be believed, the 52% of coins that are currently underwater would have to increase by 8% before a rebound. That correlates to a BTC price point of $9,600. 

Ethereum Merge

While the crypto winter and inflation report are plummeting markets, there is one piece of good news: the Ethereum Merge. While not in and of itself a value booster, it was successful and will increase many large-scale altcoin values. Though bitcoin is struggling, it is still a scarce asset and will therefore continue to increase in value.