Bitcoin (BTC) could be in the process of bottoming after gaining 25%, based on several market signals.
BTC's price has rallied roughly 25% after dropping to around $17,500 on June 18. The upside retrace came after a 75% correction when measured from its November 2021 high of $69,000.
The recovery seems modest, however, and carries bearish continuation risks due to prevailing macroeconomic headwinds (rate hike, inflation, etc.) and the collapse of many high-profile crypto firms such as Three Arrows Capital, Terra and others.
But some widely tracked indicators paint a different scenario, suggesting that Bitcoin's downside prospects from current price levels are minimal.
The first sign of Bitcoin's macro bottom comes from its weekly relative strength index (RSI).
Notably, BTC's weekly RSI became “oversold” after dropping below 30 in the week of June 13. This is the first time the RSI has slipped into the oversold region since December 2018. Interestingly, Bitcoin had ended its bear market rally in tha same month and rallied over 340% in the next six months to $14,000.
In another instance, Bitcoin's weekly RSI dropped toward 30 (if not below) in the week beginning March 9, 2020. That also coincided with BTC's price bottoming below $4,000 and thereafter rallying to $69,000 by November 2021, as shown below.
Bitcoin price has rebounded similarly since June 18, opening the door to potentially repeat its history of parabolic rallies after an "oversold" RSI signal.
Another sign of a potential Bitcoin macro bottom comes from its net unrealized profit and loss (NUPL) indicator.
NUPL is the difference between market cap and realized cap divided by market cap. It is represented as a ratio, wherein a reading above zero means investors are in profit. The higher the number, the more investors are in profit.
Related: Bitcoin must close above $21.9K to avoid fresh BTC price crash — trader
On July 21, the Bitcoin NUPL climbed above zero when the price wobbled around $22,000. Historically, such a flip has followed up with major BTC price rallies. The chart below illustrates the same.
The third sign of Bitcoin forming a macro bottom comes from another on-chain indicator called the Puell Multiple.
The Puell Multiple examines mining profitability and its impact on market prices. The indicator does it by measuring a ratio of daily coin issuance (in USD) and the 365-day moving average of daily coin issuance (in USD).
A strong Puell Multiple reading shows that mining profitability is high compared to the yearly average, suggesting miners would liquidate their Bitcoin treasury to maximize revenue. As a result, a higher Puell Multiple is known for coinciding with macro tops.
Conversely, a lower Puell Multiple reading means the miners' current profitability is below the yearly average.
Thus, rigs with break-even or below-zero revenue from mining Bitcoin will risk shutting down, giving up market share to more competitive miners. The ousting of weaker miners from the Bitcoin network has historically reduced selling pressure.
Interestingly, the Puelle Multiple reading as of July 25 is in the green box and similar to levels observed during the March 2020 crash, as well as 2018 and 2015 price bottoms.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
Cysic's Incentivised Testnet Phase 1 and Points System are now live. As a verifier, you can contribute to real ZK projects and start earning points, which will convert into mainnet tokens when the mainnet of the Cysic network goes live in early 2025.
CatherineHoldCoin is a new play-to-earn game that challenges players to hold a button to earn in-game currency, differentiating itself from competitors with its endurance-based gameplay. However, the project raises concerns due to its anonymous team, suspicious social media activity, and potential red flags about its legitimacy and airdrop promises.
JoyTech entrepreneur Avi Schiffmann, known for creating a COVID-19 tracker in 2020, has introduced a $99 AI-powered necklace to combat loneliness. But is it bordering on creepy and concerning, or is it a stroke of creative genius?
KikyoShiba Eternity’s Web3 launch on Shibarium requires LEASH token staking for exclusive access. The game's integration with Shibarium will burn SHIB tokens, potentially increasing SHIB's value and driving up its price.
WeatherlyMovement, a network of modular move-based blockchains, has launched its public testnet, Parthenon, alongside its integration with Polygon's AggLayer. Movement Labs reports $160M in committed TVL ahead of the mainnet launch later this year. Will you join the movement?
CatherineNeiro is a memecoin inspired by a rescue dog and launched on both Solana and Ethereum. The Solana-based Neiro faced suspicions of a rug pull after its developer made $2.85 million, while the Ethereum version has seen rapid growth but also raised concerns about insider control.
JoyPresidential hopeful Donald Trump recently promoted limited edition Bitcoin-themed sneakers called the "Crypto President High Tops". This release is part of Trump's strategy to appeal to a diverse voter base, including the sneakerhead community.
KikyoAlex Svanevik, CEO of Nansen, launched a Solana memecoin named IQ, which soared to a $6 million market cap before falling to around $1 million. The ease of creating memecoins through platforms like MakeNowMeme and Pump.Fun has led to many scams, emphasising the need for cautious investment.
AnaisChakra, a Bitcoin restaking protocol based on ZK proofs, has teamed up with Binance Web3 Wallet to bring you a Bitcoin pre-staking campaign for Babylon’s Mainnet launch with pre-staking ending on 7 August.
CatherineBinance Labs has invested in Particle Network, a Layer-1 blockchain platform aimed at unifying the fragmented Web3 landscape. With features like universal accounts and liquidity, Particle Network simplifies blockchain interactions, enhancing accessibility and user experience.
Weatherly