How Bitcoin On-Chain Signals Present A Solid Case For A Market Bottom

2022-10-19 16:51

Bitcoin price remains stuck below its former all-time high set five years ago. The shocking decline has been one of the worst crypto winters on record, and the market is bracing for continued meltdown.

However, a series of on-chain indicators in BTC could provide clues to how close we are to a bottom. Let’s take a look.

A Series Of Six On-Chain Indicators Shout: Bitcoin Bottom Is In

Bear markets are brutal in Bitcoin or otherwise, because the bottom is only known in hindsight. The feeling that markets will fall forever, creates a fear that freezes investors from buying at long-term lows.

Technical analysis is one tool that can be used to find oversold conditions or other signals that support the idea of a bottom. Unique to cryptocurrencies, is a subset of quantitative fundamental analysis that focuses on on-chain signals. Several such tools are potentially suggesting a bottom is in.

Here we have the Puell Multiple. The Puell Multiple is calculated by dividing the daily issuance value of bitcoins (in USD) by the 365-day moving average of daily issuance value.

Puell Multiple | Source: glassnode

Bitcoin Reserve Risk is currently demonstrating the most attractive risk/reward setup ever. Reserve Risk is defined as price / HODL Bank. It is used to assess the confidence of long-term holders relative to the price of the native coin at any given point in time.

Bitcoin Reserve Risk | Source: glassnode

In this chart, we have MVRV Z-Score. The MVRV Z-Score is used to assess when Bitcoin is over/undervalued relative to its “fair value”.

MVRV Z-Score | Source: glassnode

Net Realized Losses are the largest ever. Net Realized Profit/Loss is the net profit or loss of all moved coins, and is defined by the difference of Realized Profit – Realized Loss.

Net Realized Profit/Loss | Source: glassnode

The Realized Profits-to-Value Ratio is also in the bottom zone. The Realized Profits-to-Value Ratio is defined as the ratio of Realized Profits and Realized Cap. This metric compares profit-taking in the market with its overall cost basis on a dollar-to-dollar basis.

Realized Profits-to-Value Ratio | Source: glassnode

Finally, Net Unrealized Profit/Loss shows capitulation. Interestingly, BTC never quite reached a state of euphoria and greed during the last market top. The dataset is also becoming less volatile over time, much like Bitcoin price itself. Net Unrealized Profit/Loss is the difference between Relative Unrealized Profit and Relative Unrealized Loss.

Net Unrealized Profit/Loss | Source: glassnode

While none of these signals confirm the bottom is in for Bitcoin price action, each tool is in a zone that historically has been where past bear markets ended. Should the top cryptocurrency by market cap bottom here, it would be the smallest maximum drawdown in Bitcoin history.

Follow @TonySpilotroBTC on Twitter or join the TonyTradesBTC Telegram for exclusive daily market insights and technical analysis education. Please note: Content is educational and should not be considered investment advice.

Featured image from iStockPhoto, Charts from TradingView.com origin »

Bitcoin (BTC) на Currencies.ru

$ 96551.68 (+0.00%)
Объем 24H $17.298b
Изменеия 24h: 0.23 %, 7d: -1.08 %
Cегодня L: $96536.88 - H: $96670.7
Капитализация $1914.413b Rank 1
Цена в час новости $ 19169.29 (403.68%)

bitcoin market one worst shocking decline crypto

bitcoin market → Результатов: 126


Bitcoin’s Rising Dominance: Shifting Miner Activity and Growing Institutional Interest

Since 2023, Bitcoin’s dominance within the cryptocurrency market has been steadily climbing and is now over 70% of the combined market cap of the top 300 assets. This reflects both growing investor confidence and a strengthening position for the asset as the leading store of value in the digital world. Meanwhile, recent changes in miner [...]

2025-2-11 12:25


Фото:

Bitcoin rebounds above $95K after Monday’s plunge: what’s next for crypto market?

The cryptocurrency market is showing signs of resilience after a sharp downturn on Monday, with Bitcoin leading a partial recovery to climb above the $95,000 mark. Bitcoin had previously plummeted to a low of $89,000—its lowest level in 24 days—as traders anxiously awaited the release of the latest US Consumer Price Index (CPI) report. Major […]

2025-1-14 08:49


Фото:

Bitcoin’s bull market: how to read the signals in 2025

Bitcoin, rebounding powerfully from its bear market lows, has reasserted itself as a leading asset, significantly outperforming traditional financial markets in 2024. Fueled by the historic launch of Bitcoin ETFs in January, a new US administration seemingly supportive of the crypto industry, and the Federal Reserve’s shift toward easing monetary policy, Bitcoin’s resurgence has been […]

2025-1-1 12:39


Bitcoin Fees Drop 86% While Market Confidence Soars As Dominance Reaches New Highs

Despite an 86% plunge in Bitcoin transaction fees this quarter, market confidence remains resilient, with Bitcoin’s dominance hitting its highest level since April 2021. BTC's market share reached its highest since April 2021 this quarter Bitcoin's price traded mostly sideways throughout the quarter, while ETH and smaller tokens set new […]

2024-10-7 12:05


Bitcoin ‘Final Cycle Pump’ Puts Price As High As $200,000

Bitcoin (BTC) could be gearing up its last explosive rally of a four-year market cycle, which traditionally kicks off at the beginning of a halving event and culminates just before the next one. A crypto analyst has boldly predicted that the price of Bitcoin could surge to $200,000 and above, marking new All-Time Highs (ATHs) and the peak of the long-awaited bull market.

2024-9-23 03:01