Traders believe Bitcoin has bottomed out, but chain indicators point to another takeover

Traders believe Bitcoin has bottomed out, but chain indicators point to another takeover – Mail Bonus

The well-being of the beef market, which moved prices to new heights throughout 2021, has given way to a slump in the market for which Bitcoin (BTC) buyers bought since January 1, 2021. Data from Glassnode show that these buyers “are now underwater” and the market is living themselves under the last capitulation event.

Bitcoin net unrealized gain / loss. Source: Glassnode

As shown in the figure above, NUPL, a measure of total unrealized gains and losses of the network as a percentage of market value, indicates that “less than 25% of market value is retained in profits”, which “resembles a market structure equivalent to -capitulation stages in previous bear markets. “

Compared to previous event submissions, if a similar move occurred at current levels, the price of Bitcoin could fall in the $ 20,560 to $ 25,700 range in the “full submission scenario.”

The market is looking for the bottom

Since the cryptocurrency market clearly trades in the bear market, the question in everyone’s mind is “where is the bottom?

One measure that can help provide guidance is the Mayer Multiple, a volatility device that measures the ratio between a price and a 200-day moving average.

Mayer Multiple model for Bitcoin. Source: Glassnode

In previous bear markets, “sold or underestimated conditions have coincided with the Mayer multiple falling between 0.6 and 0.8,” according to Glassnode, and that is exactly where Bitcoin is now.

Based on pricing measures from previous bear markets, the recent Bitcoin trading range is between $ 25,200 and $ 33,700 in line with the B-phase of previous bear market processes and could mark a low BTC in the current round.

The price model for Bitcoin also provides an insight into what the possible price base for Bitcoin might be, as current reading from the Bitcoin data provider LookIntoBitcoin indicates that the real price of BTC is $ 23.601 as of 5 June.

Bitcoin implemented price. Source: LookIntoBitcoin

The combination of these two metrics suggests that the BTC minimum could range from $ 23,600 to $ 25,200.

Connected: Within the cryptocurrency bear market, institutional investors are accumulating Bitcoin: CoinShares

Short-term holder and miner

Under current market conditions, sales have been largely dominated by short-term owners, similar to the behavior seen in two previously widespread bear markets where long-term owners owned more than 90% of the market’s profits.

Long-term owners of Bitcoin share the supply of profits. Source: Glassnode

A recent drop below $ 30,000 for Bitcoin saw the rate of supply increase in profits over 90% for the long-term holder group, suggesting that short-term owners have “essentially reached closer to the maximum pain threshold.”

According to Glassnode, miners have also been net sellers in recent months as the reduction in BTC has hampered the profitability of miners which has led to a “total reduction in miners between 5K and 8K BTC per month.

Bitcoin Miner Net Position Change. Source: Glassnode

If the price of BTC continues to fall from here, the possibility of an increase in miner submission is not ruled out, as has been shown in the past with Puell Multiple, which is the ratio of the daily issuance value of bitcoin to the 365-day moving average of this value.

Puell multiple vs BTC price. Source: LookIntoBitcoin

Historical data show that the scale has fallen into the sub-0.5 region in the later stages of the previous bear market, which has not yet occurred in the current cycle. Given the current market conditions, a further 10% reduction in BTC prices could lead to the final introduction of the miner, which would be similar to the price reduction and sales seen at the height of previous bear markets.

The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Every investment and trading business involves risk, you should conduct your own research when making a decision.