The Cathie Wood-owned firm believes Bitcoin, which is now trading at $83,563.05, sits between two key levels. In a video released on February 11, Cathie Wood stated that Bitcoin's price could go as high as $1.5 million in the next five years.
Now, Ark Invest says that investors who are short-term bears on Bitcoin pay an average of $92,020 for each coin, and its 200-day moving average — a critical support level, sits at $82,000 in U.S. dollars.
Bitcoin's fear and greed index hit a 2-year low:
The Fear & Greed Index reflects an "extreme panic" sentiment last seen in 2017.
A further positive is that Bitcoin's Spent Output Profit Ratio (SOPR) has just reset to 1. This means anyone selling now is only breaking even rather than taking losses. Throughout various cycles of market activity, this is the tipping point before price recovery starts again.
In the 'Bitcoin Reacts to Trump' report Ark Invest suggests that a slowdown in circulation and declining consumer sentiment (especially in the U.S.) are the reasons for the market turmoil. It states, "Consumers and businesses seem to be more cautious amid uncertainty associated with the U.S. political transition."
Households are lowering their spending as big retailers like Walmart have revised their sales forecasts.
Big players are bullish on Bitcoin
Institutional demand for Bitcoin still seems strong despite the price decline. BlackRock has also launched a Bitcoin exchange-trade product (ETP) in Europe. Despite the drop below $80,000, Bitcoin shows continued strength on-chain.
The Bitcoin network is more secure after a 2.2% increase in mining difficulty. On the other hand, long-term Bitcoin investors increased by 4.7%, suggesting many investors are not selling their Bitcoin.
Long-term holders continue to control a significant amount of Bitcoin, which means they are still confident that Bitcoin will increase in value in the future, as per the report.
Bitcoin’s five-year CAGR stands at 74% . On February 11, Cathie Wood hypothesized that if Bitcoin achieved a CAGR of only 68%, it could attain $1.5 million by 2030.
