On-chain data flashes Bitcoin buy signals, but the bottom could be under $20K

Bitcoin is up over 6% in the past 24 hours and other cryptocurrencies are benefitting too. Many investors have been buying into digital assets this week as a way to hedge their bets against potential US/China trade tariffs however, it seems that there could be more downside to Bitcoin than upside.

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The “bitcoin upside” is a market that has been on the rise for quite some time now. However, there is a chance that bitcoin could be in for a tough period of time. The “bottom could be under $20K.”

Every Bitcoin investor is looking for signs that the market is nearing a bottom, but this week’s price movement implies we aren’t quite there yet. 

The most recent Blockware Solutions Market Intelligence Newsletter discovered evidence of this by looking at the monthly return for Bitcoin (BTC), which was slammed with a quick decrease that “converted to one of the greatest drawdowns in monthly returns for the asset class in its history.”

On-chain-data-flashes-Bitcoin-buy-signals-but-the-bottom-couldBitcoin returns are calculated monthly. Blockware Solutions is the source of this information.

As global economic constraints build, Bitcoin continues to move inside an increasingly limited trading range that is steadily being squeezed to the downward.

The question of whether the price will continue to fall is a hot issue among crypto experts, and the current consensus is that it will.

Analysts believe the market will remain gloomy until $45,000 is restored.

As long as BTC trades below the $45,000 to $47,000 dollar area, according to Blockware Solutions, a number of indications point to a gloomy outlook.

This includes the fact that Bitcoin began 2022 at $46,200, but the 180-week exponential hull moving average, which lends greater weight to recent price behavior, says that BTC is now falling at $47,166.

1653682508_265_On-chain-data-flashes-Bitcoin-buy-signals-but-the-bottom-couldBTC/USD 1-week chart vs. 180-week exponential hull moving average Blockware Solutions is the source of this information.

Short-term hodlers, defined as those who have been in the market for fewer than 155 days, have been struck particularly hard by market downturn, with the current cost basis for short-term holders resting at $45,038.

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These statistical factors, taken together, show that BTC sentiment will stay pessimistic as long as the price remains below $45,000.

To prevent a ‘cascade south,’ the bitcoin price is approaching important support levels.

What’s the lowest point?

Despite the present doom and gloom analysis, there are a few indicators that the market is looking for a bottom.

Following the early May plunge below $30,000 for Bitcoin, “network activity intensified as more supply changed hands but the network losing value,” according to the latest Glassnode Uncharted newsletter.

1653682509_825_On-chain-data-flashes-Bitcoin-buy-signals-but-the-bottom-couldNVT adjusted for Bitcoin entities. Uncharted (source)

Glassnode claims that

“Historically, this behavior has heralded a fantastic purchasing opportunity.”

The research used the entity-adjusted dormancy flow, which has been consolidating inside a region that was previously deemed an optimum buying zone, to back up the assumption that Bitcoin is presently in a decent buy zone.

1653682509_257_On-chain-data-flashes-Bitcoin-buy-signals-but-the-bottom-couldThe flow of Bitcoin entity-adjusted dormancy vs. the flow of Bitcoin entity-adjusted dormancy Uncharted (source)

Similarly, Blockware Solutions sees several data points that suggest the market is looking for a bottom, including the Mayer Multiple, a metric that compares the current market price to the 200–day moving average, which is currently “near some of the lowest readings on record,” according to Blockware Solutions.

On-chain-data-flashes-Bitcoin-buy-signals-but-the-bottom-couldMayer Bitcoin Multiple Blockware Solutions is the source of this information.

While several data indicators suggest that the cryptocurrency market is in a bear market, there are signs that seller tiredness is nearing a limit and that the market is looking for a bottom. It’s unclear where that will finally be discovered, although multiple signs now indicate to a strong level of support around $21,000.

The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.

Bitcoin is in the midst of a bearish market, but the bottom could be under $20K. Reference: bitcoin bearish prediction.

Related Tags

  • cryptocurrency 2022 outlook
  • coinbase
  • bitcoin catalyst 2022
  • bitfinex crypto hack
  • bitcoin potential

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