Is Bitcoin dead? Indicators suggest BTC price ready for a reversal
Macro indicators suggest Bitcoin has found a price floor as whales begin to accumulate again.
After months of down trending price action and a 70% drop from all-time highs, Bitcoin price finally appears to be consolidating and forming a trading range around $20,000.
Price consolidation may not sound that exciting. However, the fact that BTC trading volume is down and the market is ranging out suggests that we may be approaching an accumulation phase and nearing the end of the bear cycle. Low relative trading volume is often a sign that traders have cut their losses and walked away. This is also a time where smart money can pick up deals at heavily discounted prices.
The accumulation trend of Bitcoin since 2017. Source: Glassnode. Image: Finder
The Bitcoin Accumulation Trend Score displayed above shows that whales are currently adding to their positions and appear confident in an upside reversal.
Additionally, the chart currently shows similarities to the 2018 market bottom, as well as the beginning of the 2020 bull run. However, this could just be an extension of the current bear market.
Another indicator that is used to analyse market bottoms is the 200 week moving average. Bitcoin price recently touched this moving average, following the Terra meltdown and DeFi deleveraging events. Although price has only touched this level a handful of times prior to this, each time resulted in a v-reversal pattern and the beginning of a new bull run.
The 200 week moving average is a historical indicator of trend reversals. Source. TradingView Image: Finder
If the $20,000 zone does act as the much needed market support level, a drawn out consolidation phase is to be expected. Although it is impossible to predict exactly how long a ranging market may last, previous accumulation phases have lasted several months, or more. This gives traders and investors time to regroup and plan how to play their next move, before it all starts again.
Disclosure: The author owns a range of cryptocurrencies at the time of writing
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