Analyst Lyn Alden Warns That Bitcoin Capitulation Might Not Be Over Yet

According to investment strategist Lyn Alden, 2022 might not be very bullish for Bitcoin (BTC) and warns that the capitulation might not be over yet.

Alden recently spoke with Stansberry Research, and said that she’s looking at the Purchasing Managers’ Index (PMI) to better understand where Bitcoin trends are going.

The Purchasing Managers’ Index (PMI) is an index of the prevailing direction of economic trends in the manufacturing and service sectors, covering more than 30 advanced and emerging economies worldwide.

“Bitcoin’s major bull runs historically – there’s only a sample size of about four of them: 2011, 2013, 2017 and 2020. Those occurred during rising PMI environments, so economic acceleration. So generally the type of period now has historically not been great for Bitcoin’s price action…

Right now, Bitcoin’s classified due to its volatility as a risk asset by most pools of capital, so I’m not particularly bullish for the calendar year 2022.”

The United States’ PMI is currently at 57.6 following a downwards trend.

According to Alden a falling PMI during a tightening monetary environment could act as a catalyst for a capitulation event.

“If you get some sort of market turbulence, you could have a capitulation similar to March 2020 or similar to the fourth quarter of 2018 where the Fed was still trying to tighten into a declining PMI environment.  

If you get a capitulation like that, I would consider that a buying opportunity. I don’t know if we’re going to get that or not. We certainly could see a break below $30,000 in that kind of capitulation type of environment.”

Regardless of the shorter term bearish outlook, Alden is bullish on Bitcoin in the longer time frame.

“Looking at multiple years, say a three to five-year time period, I’m still structurally bullish on Bitcoin when I look around the ecosystem, I look around what’s happening on the Lightning Network. Every cycle, the infrastructure gets built to absorb new types of capital.

First, it was peer to peer. Then it was the early exchanges that had trouble getting bank access. Then it was the more regulated exchanges, and then it was the more institutional-grade custodians and larger pools of capital coming in. I think that trend is still intact.”

At the time of writing, BTC trades at $43,805, up 14.2% on the weekly chart.