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The short-term technical outlook for Bitcoin (BTC) does not look good.
The world’s first and largest cryptocurrency by market capitalization is currently down more than 13% from its annual high in April when it crossed the $31,000 level.
In doing so, it moved down the 21-day and 50-day moving averages (both in the mid-$28,000s) convincingly, with the last move below $27,000.
This week’s data showed that US inflation remains high but is easing. Relieving pressure on the Fed This is to keep interest rates high for longer.
However, Bitcoin still threatens to break below the low end of the mid-$26,000 to $31,000 range we have been planning since mid-March.
Perhaps more prescient, BTC is also threatened with a breakout below the pennant structure that has formed over the past few weeks.
When these key support levels eventually drop, engineers expect testing of support in the $25,200-$400 region.
But Bitcoin bears beware.
A further 6% drop from current levels would still not validate Bitcoin’s long-term bearish theory.
Against the backdrop of an improving macro environment from Bitcoin’s perspective, it still seems very unlikely that it will fall to a low in late 2022 below $20,000 (Bitcoin is a hawkish prefers the irrelevant Fed and U.S. banking chaos).
Long-term technical analysis also shows the bear market is still alive and well, with Bitcoin still well above its 200-day moving average, above the 2023 uptrend, and a bullish golden cross three months ago. have experienced
Another reason to be bullish is that a huge list of widely followed on-chain indicators indicate that Bitcoin is in the early stages of a new bull market.
Bitcoin bear market recovery
Glassnode’s “Bitcoin Bear Market Recovery” dashboard tracks eight metrics to see if Bitcoin is trading above key pricing models, whether network usage is gaining momentum, We will see if the market returns to profitability and if USD Bitcoin asset balances are favorable in the long term. -Term HODLers.
If all 8 are flashing green, this is historically a strong bullish sign for the Bitcoin market.
All eight indicators are flashing green at the moment.
Bitcoin is trading comfortably above the first two 200DMA and realized prices.
Breaking above these key levels is seen by many as an indication that short-term price momentum is shifting in a positive direction.
The 30-day SMA for new Bitcoin address creation surpassed the 365-day SMA a few months ago. This indicates that the speed of new bitcoin wallet creation is accelerating. This has historically happened at the beginning of a bull market.
Meanwhile, the revenue multiple from fees turned positive a few weeks ago.
A Z-score is the number of standard deviations above or below the mean of a data sample.
In this example, Glassnode’s Z-score is the number of standard deviations above and below the average Bitcoin fee income over the last two years.
This means that the third and fourth indicators as to whether network utilization is again trending positive are also sending bullish signals.
Moving on to the fifth and sixth indicators related to market profitability. The 30-day Simple Moving Average (SMA) of the Bitcoin Realized Profit and Loss Ratio (RPLR) indicator.
This means that the Bitcoin market is realizing a greater percentage of gains (in US dollars) than losses.
According to Glassnode, “this generally indicates that sellers with unrealized losses are exhausted and that there is healthy demand inflows to absorb profit-taking.”
Therefore, this indicator continues to send bullish signals.
Meanwhile, the 30-day SMA of Bitcoin’s Adjusted Return on Consumption Output (aSOPR) indicator, a metric that reflects the extent of realized gains and losses for all coins moving on-chain, is also above 1.
This essentially means that the market is making good profits on average over the last 30 days.
Looking back over the last eight years of Bitcoin’s history, a rise above 1 after a long period of below 1 aSOPR was a great buy signal.
Finally, there are two final indicators related to whether USD balances have turned back in Hodler’s favor sufficiently to indicate the depletion of weak hand sellers.
The Bitcoin Realization HODL multiple has been trending upwards for the past 90 days, a bullish sign according to Glassnode.
“When RHODL multiples transition to an upward trend over a 90-day period, it signals that US dollar-denominated wealth is starting to return to new demand inflows,” said the cryptocurrency analysis firm.
This “indicates that profits are taking hold and that the market has the capacity to absorb the gains …[and]that long-term holders are starting to spend the coin,” Glassnode said. ing.
The final indicator of Glassnode’s “Recovering from a Bitcoin Bear” dashboard is whether the 90-day exponential moving average (EMA) of Bitcoin supply in profit has been trending upwards over the past 30 days.
Profit supply is the number of Bitcoins that last moved when the price in USD terms was lower than it is now, meaning that Bitcoin was bought at a lower price and paper profits were held in the wallet. means
This indicator also flashes green.
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