Is Bitcoin dead? Indicators suggest BTC price ready for a reversal
Macro indicators suggest Bitcoin has found a price floor as whales begin to accumulate again.
After months of down-trending price action and a 70% drop from all-time highs, Bitcoin’s (BTC) price finally appears to be consolidating and forming a trading range around $20,000.
Price consolidation may not sound that exciting. However, the fact that BTC trading volume is down and the market is ranging out suggests that we may be approaching an accumulation phase and nearing the end of the bear cycle. Low relative trading volume often indicates that traders have cut their losses and walked away. This is also when smart money can pick up deals at heavily discounted prices.
The accumulation trend of Bitcoin since 2017. Source: Glassnode. Image: Finder
The Bitcoin Accumulation Trend Score displayed above shows that whales are currently adding to their positions and appear confident in an upside reversal.
Additionally, the chart currently shows similarities to the 2018 market bottom, as well as the beginning of the 2020 bull run. However, this could just be an extension of the current bear market.
Another indicator used to analyze market bottoms is the 200-week moving average. Bitcoin price recently touched this moving average following the Terra meltdown and DeFi deleveraging events. Although the price has only touched this level a handful of times before, each time resulted in a v-reversal pattern and the beginning of a new bull run.
The 200-week moving average is a historical indicator of trend reversals. Source. TradingView Image: Finder
If the $20,000 zone does act as the much-needed market support level, a drawn-out consolidation phase is to be expected. Although it is impossible to predict exactly how long a ranging market may last, previous accumulation phases have lasted several months or more. This gives traders and investors time to regroup and plan how to play their next move — before it starts again.
Disclosure: The author owns a range of cryptocurrencies at the time of writing
Trying to get a handle on the markets? Explore strategies for how to trade crypto or see if there's a better platform for you with our guide to the best crypto exchanges.
Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.
