3 Historically Accurate On-Chain Bitcoin Metrics Flashing 'Bottom'

3 Historically Accurate On-Chain Bitcoin Metrics Flashing ‘Bottom’

Bitcoin (BTC) and other riskier assets on October 21 as traders examined macro indications that the Federal Reserve will continue to raise interest rates. However, BTC/USD remains range bound within the $18,000-$20,000 price range, which shows a strong conflicting bias in the market.

BTC price has stabilized above $18,000 since June

Notably, BTC price has not been able to dive deeper below $18,000 since it first tested the support level in June 2022. As a result, some analysts said Believe That the cryptocurrency has bottomed, since it has already corrected more than 70% from its high of $69,000, created almost a year ago.

BTC/USD daily price chart. Source: TradingView

“During the 2018 bear market, BTC saw a maximum decline of 84% from peak to trough, lasting 364 days, while the 2014 cycle lasted longer, hitting a bottom after 407 days,” pointed Arcane Research in its weekly report on the cryptocurrency market, adding:

“Both troughs were followed by unusually low volatility.”

The historical decline of Bitcoin. Source: Arcane Research

In addition, a wave of widely watched Bitcoin indicators on the chain is also pointing to a possible bullish reversal ahead. Let’s take a look at some of the most historically important metrics.

Bitcoin MVRV-Z نقاط Points

The MVRV-Z score evaluates Bitcoin overbought and oversold cases based on its market value and fair value.

Historically, when the market value of Bitcoin exceeded the fair value, it indicated the top of the market (red zone). On the contrary, it indicates a market bottom (the green area) when the market value exceeds the fair value.

Bitcoin MVRV Z-Score. Source: Glassnode

The MVRV-Z score has been in the green since late June, indicating that Bitcoin is on its way to a decline.

Reserve risk

Bitcoin reserve risk assesses the confidence of long-term token holders in relation to its price in time. Historically, higher reserve risk (red zone) has coincided with market tops, reflecting lower investment confidence in record high Bitcoin prices.

Conversely, higher confidence and lower bitcoin price mean lower reserve risk (green zone), or better investment risk/return.

Bitcoin reserve risk vs price. Source: Glassnode

Bitcoin reserve risk fell into the green in late June, indicating that Bitcoin may undergo a strong bullish reversal sooner or later.

Bitcoin Bill Multiple

Puell Multiple reflects the daily Bitcoin issue ratio (in USD) and the 365-day moving average of the daily issue value.

Related: Bitcoin Bear Market Will Last ‘Max 2-3 Months’ – Interview with BTC Analyst Philip Swift

Historical data shows that the Bitcoin market has bottomed out when Puell Multiple falls into the green zone defined by the 0.3-0.5 range. Conversely, the market peaks when the ratio crosses the 4-8 red zone.

Bitcoin Puell Multi for the price. Source: Glassnode

As of October, Bitcoin’s Puell Multiple is inside the green, indicating a possible price reversal to the upside.

As Cointelegraph mentionedThe stock of BTC on cryptocurrency exchanges has also fallen to multi-year lows at the fastest pace since June, indicating that current price levels are becoming an important area for accumulation.

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