These Metrics Could Help Time The Bitcoin Market Bottom
Crypto Briefing | May 17, 2022 01:42AM ET
On-chain metrics can help anticipate whether Bitcoin is close to reaching a market bottom.h3 Key Takeaways/h3
- Bitcoin has lost more than 43,600 points over the past seven months
- The top cryptocurrency now hovers around $30,000 while threatening to dip lower
- Technical indicators suggest market bottom could be found between $22,380 and $15,110
Bitcoin is locked in a steep downtrend that has seen it retrace by more than 63% over the past seven months. Still, on-chain metrics suggest that the top cryptocurrency has further to fall before it hits a market bottom.
h2 Anticipating The Market Bottom/h2Bitcoin appears to have found temporary support around the psychological $30,000 level, but another downswing is still in the cards.
The flagship cryptocurrency has lost more than 43,600 points in market value over the past seven months. It went from hitting an all-time high of nearly $69,000 in early November 2021 to recently sweeping a multi-year low of $25,365.
Even though the losses have been significant, it’s possible Bitcoin’s steep downtrend has not reached exhaustion yet.
The Net Unrealized Profit/Loss (NUPL) indicator can help anticipate shifts in market sentiment and predict market tops and bottoms on Bitcoin’s trend.
It relies on multiple on-chain data points to demonstrate potential investors’ emotions at a given time, which helps in determining price movements.
The market sentiment around Bitcoin appears to have shifted from Anxiety to Fear after prices dropped below $30,000. Still, the NUPL suggests that investors’ emotions have to drop from Anxiety to Capitulation to mark the end of the downtrend.
Logarithmic regression lines by highlighted by crypto YouTuber Benjamin Cowen define two key price levels where Bitcoin could bottom out. The non-bubble fit regression band sits at $22,380, while the non-bubble lower regression band hovers around $15,110.
Get The News You Want
A downswing to these price points could see the NUPL shift to Capitulation, presenting a unique opportunity for sidelined investors to re-enter the market.
It remains to be seen whether the combination of NUPL and the logarithmic regression lines will help anticipate a market bottom as these indicators have done in the past.
It is also worth noting that after the significant correction that Bitcoin has seen over the past few months, there is a chance for it to enter a consolidation period before its next significant price movement.
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.