Is Bitcoin dead? Indicators suggest BTC price ready for a reversal

Posted: 29 June 2022 9:07 pm
BTC 07-01 1800x1000

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

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