Bitcoins (BTC) the recent price increase from $16,500 to $25,000 can be attributed to a brief squeeze in the futures market and the recent macroeconomic improvements. But while prices have risen, data suggests many buyers (including whales) have stayed away.
The recent rise to $25,000 shared many similarities with the bear market rally of 2019, which saw the price of Bitcoin rise 330% to highs around $14,000 from the November 2019 low of $3,250. Recently, the BTC/USD pair is up 60% from its November 2022 low.
On-chain and market indicators related to the 2019 rally are sending mixed signals about whether or not the Bitcoin rally will continue. Still, there are strong reasons to believe that the market has reached a crucial turning point where it can either turn into a full-blown bull market or slip back into a long-term bearish trend.
Let’s look at the top five indicators to understand the current price dynamics in relation to the 2019 bull run.
Bitcoin is dealing with historic trading levels
Bitcoin price broke above the 200-day moving average (MA) at $19,600, which could encourage paper traders looking to open long positions. Historically, this metric has behaved like a bullish pivot line, with breakouts above it being bullish and vice versa.
BTC/USD typically retests the 200-day MA for a breakout, raising the possibility of a correction towards $19,500. However, this was not the case in 2019 when the price continued to rise without pulling back to the 200-day MA.
At the same time, traders are likely to pay attention to the 200-period weekly moving average at $25,100. Bitcoin price has never dropped below the 200 week MA until November 2022 and regaining that level could encourage technical buyers to join the bandwagon.
However, until a breakout occurs, traders may continue to stay away. Funding rates for perpetual swaps are currently neutral, suggesting traders are awaiting confirmation.
Crypto Twitter trader Immortal found that the market is only at the “halfway point” regarding the duration of the current rally compared to 2019. The 2019 rally lasted 193 days from the bottom to the top, while only 92 days have passed since the rally. down November 9, 2023.
Immortal goes on to say that if the 2019 fractal holds true in 2023, BTC/USD could rise as high as $46,000 by March.
The stablecoin supply ratio oscillator is near its 2019 peak
Bitcoin’s stablecoin supply ratio (SSR) oscillator measures the market’s purchasing power. The indicator measures the ratio between the market capitalization of Bitcoin and the supply of stablecoins. Low values on the SSR oscillator indicate higher purchasing power of stablecoins. Conversely, a peak in the metric shows overbought conditions.
The February 2023 Bitcoin price rally saw the SSR oscillator surge to levels not seen since 2019 and 2021. The indicator suggests that the positive trend could end soon. There is little chance of a final move above the psychological $30,000 level.
However, the data could be taken with a grain of salt due to regulatory crackdown on BUSD stablecoin, which caused a significant drop in its supply. It could have skewed the SSR oscillator to show overbought conditions.
One of the biggest concerns with the current surge is the lack of whale buying. In contrast to 2019, when the number and holdings of BTC addresses with more than 1000 BTC increased as the price rose from the bottom and whales sold in the current rally. The difference between the number of whales and the price raises concerns about the sustainability of the positive trend.
The data highlights a crucial bull point
Investors are adding to their winning positions when pulling back in an uptrend and this is indicated when the Spent Output Profit Ratio (SOPR) indicator remains above one. The opposite is a downtrend where bears dominate the market by selling into a rally. A metric crossing above 1 is a potential trend reversal signal.
The 7-day moving average of Glassnode’s modified SOPR indicator shows that the bearish trend is likely to have reversed. The indicator turned bullish when BTC broke above $20,800 in January 2023. The metric retested a key support level with the price of Bitcoin at $21,800, making it a key support level for a sustained uptrend.
Related: Bitcoin faces a weekly and monthly close with a macro bullish trend at stake
Similarly, the price has moved above the average buy level of both short-term and long-term holders, another signal of a possible trend reversal. This could be a sign that the market has reached a major turning point as the oscillators in the chain return to balance.
Metrics also suggest that a potential bullish trend seems likely, while the price is holding above the support at $21,800, $20,800 and $19,600.
A weekly close above $25,100 could encourage derivatives and technical traders to buy into the current bull, but there are some warning signs that the market may reach overheated conditions and a quick correction towards lower support levels cannot be ruled out.
The views, thoughts and opinions expressed herein are solely those of the authors and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading step involves risk and readers should do their own research when making decisions.
