Important takeouts:
-
The dormant flow adjusted to Bitcoin entities fell below the historic purchase zone of 250,000.
-
Short-term holder Nupl became negative and showed seller fatigue.
-
Bitcoin’s V-shaped and double-bottom chart pattern suggests a potential rise from $118,000 to $124,500 in the short term.
Bitcoin (BTC) prices are 5% above the local low of $108,650, with three indicators suggesting that this level may have marked the local bottom of BTC.
Ordinated dormancy in the entity gives hints at BTC bottom
One metric that can be used to determine if the Bitcoin market has bottomed out is the dormant flow of entity adjustment, representing the ratio of BTC’s current market capitalization to the annual dormant value (measured in US dollars).
Related: Bitcoin Bulls are back: What you need for a gathering up to $120K is here
Historically, if below the indicator (red circle) below the 250,000, a “good historical purchase zone” was presented, often preceding a significant price recovery or marking the end of the price correction. The indicator fell to a low of 133,300 on Thursday.
Historically, more than 250,000 breakouts after the previous DIP coincided with the beginning of a crucial bull run. One example is when Bitcoin bottoms out in July 2021, launches a new bull run, and the metric falls into the green zone. Bitcoin hit a record high of $69,000 on November 10th.
When the indicator sends a bull signal again, the price could rise from around $114,000 from current levels, testing its highest ever high in the short term.
As reported by Cointelegraph, Bitcoin’s used production return ratio (SOPR) also fell to 1.5.
Bitcoin STH Net’s unrealized profit/loss will be reversed to negative
Bitcoin Short-Term Holders Net Unrealized Profit/Loss (NUPL) has upended negative signal stress among buyers these days.
“STH surrender events have historically been a significant period of market resets, and in many cases lay the foundation for accumulation to be updated,” Onchain data provider GlassNode said Monday.
“History says this surrender zone often marks the bottom of the local area,” Crypto Influencer Jack said on Tuesday’s X-Post.
“Setups call for early accumulation.”
Historically, negative short-term holders Nupl have been consistent with the bottom of the bare market or amended price, as they have shown extensive fatigue between sellers.
With this sales pressure, demand from long-term holders or new buyers can stabilize and increase prices.
For example, negative NUPL measurements were observed near April, where April local bottoms were under $75,000 before the price of the BTC/USD pair rose by 65% at a high of 65%.
More charts suggest a BTC price bottom of $108,000
BTC price action from September 18th has introduced a V-shaped pattern on the 12-hour chart. This follows the initial decline in Bitcoin, which fell 7.8% to $108,700 on Thursday.
Buyers have accumulated more in this dip, bringing a sharp reversal to current levels. The relative strength index (RSI) has increased from the 27 sale zone to 53, indicating an increase in the momentum of the rise.
If the price tries to complete a V-shaped pattern, it could rise further towards the pattern’s neckline.
Zooming out, the double bottom layer on the daily chart predicts it will return to its all-time high of $124,500 after its $118,00 resistance breaks. Such a move will increase gross profit to 10% from current prices.
Bitcoin’s market structure is “just clean,” said crypto analyst Matthew Hyland. It mentions potential breakouts from double bottom and reverse head and shoulder patterns in the daily time frame.
“It’s where BTC has historically discovered the best cycle, and it’s coming in after the fourth quarter.”
As reported by Cointelegraph, BTC prices could then rise towards the $140,000 range if resistance between $112,000 and $114,000 is broken.
This article does not include investment advice or recommendations. All investment and trading movements include risk and readers must do their own research when making decisions.