The recent rise in the price of Bitcoin (BTC) from $16,500 to $25,000 can be attributed to a short squeeze in the futures market and recent macroeconomic improvements. However, although prices increased, the data suggests that many interested buyers (including whales) were left on the sidelines.
The recent surge to $25,000 shared many similarities with the 2019 bear market surge, which saw Bitcoin price 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 compared to the 2019 surge send mixed signals as to whether or not Bitcoin’s rally will continue. However, there are strong reasons to believe that the market has reached a crucial inflection point where it can turn into a full bull market or return to a long-term downtrend.
Let’s look at the top five indicators to understand the current price dynamics in relation to the 2019 bull run.
Bitcoin Tackles Historic Trading Levels
Bitcoin price broke above the 200-day moving average (MA) at $19,600, which could encourage traders to open a long position. Historically, this metric has acted as a bullish-bearish pivot line, with breaks above being bullish and vice versa.
BTC/USD typically retests the 200-day moving average on 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 a correction to the 200-day moving average.
At the same time, traders are likely to pay attention to the 200-period weekly moving average at $25,100. The price of Bitcoin had never dipped below the 200-day weekly moving average until November 2022, and recovering this level could encourage technical buyers to join the pack.
However, until a breakout occurs, traders could continue to bank. Funding rates for perpetual swap contracts are currently neutral, suggesting that traders are waiting for confirmation.
Crypto Twitter trader Immortal found that the market is only “halfway there” considering the duration of the current rally compared to 2019. The 2019 rally lasted 193 days from bottom to top, while that only 92 days have passed since the bottom on November 9, 2023.
Immortal goes on to say that if the 2019 Fractal timeline holds true in 2023, BTC/USD could surge as high as $46,000 in March.
A stablecoin supply ratio oscillator is near the 2019 high
The Bitcoin stablecoin supply ratio (SSR) oscillator measures the purchasing power of the market. The indicator measures the relationship between the Bitcoin market capitalization and the stablecoin supply. Low readings on the SSR oscillator indicate higher stablecoin purchasing power. Conversely, a spike in the metric indicates overbought conditions.
Bitcoin’s price surge in February 2023 caused the SSR oscillator to reach levels not seen since 2019 and 2021. The indicator suggests that the positive trend could end soon. There is a slight chance of one last push higher towards the psychological $30,000 level.
However, the data could be taken with a grain of salt due to the regulatory crackdown on the BUSD stablecoin, which caused a significant decline in its supply. It could have skewed the SSR oscillator to show overbought conditions.
One of the biggest concerns of the current surge is the lack of whale purchases. Contrary to 2019, when the number and holdings of BTC addresses with more than 1,000 BTC increased as the price rose from the bottom and the whales have sold in the current rally. The divergence between the number of whales and the price raises concerns about the sustainability of the positive trend.
The data highlights a crucial turning point between bulls and bears
Investors increase their winning positions on retracements of an uptrend, which is evidenced when the SOPR (Spent Output Profit Ratio) indicator stays above one. The opposite is true in a downtrend, where bears dominate the market by selling rallies. A metric crossing above 1 is a potential trend reversal signal.
The 7-day moving average of Glassnode’s Adjusted SOPR indicator shows that the downtrend has likely reversed. The indicator turned bullish when BTC broke above $20,800 in January 2023. The metric retested the fundamental support level with Bitcoin price at $21,800, making it a crucial support level for a trend. sustained bullish
Also, the price has moved above the mid-buy levels of the short and long-term headlines, which is another sign of a possible change in trend. This could be a sign that the market has reached a crucial turning point as on-chain oscillators return to equilibrium.
The indicators are also pointing to a possible uptrend as long as the price remains 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 the current rally, but there are some warning signs that the market could be reaching overheated conditions and a quick correction towards higher levels cannot be ruled out. of lower support.
The views, thoughts and opinions expressed herein are solely those of the author 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 move involves risk, readers should do their own research when making a decision.
Investments in crypto assets are not regulated. They may not be suitable for retail investors and the entire amount invested may be lost. The services or products offered are not directed or accessible to investors in Spain.