Bitcoin (BTC)’s recent price surge from $16,500 to $25,000 can be attributed to short-term pressure in the futures market and recent macroeconomic improvements. Although prices rose, data indicates that many interested buyers (including whales) remained on the sidelines.
The recent rally to $25,000 shared many similarities with the bear market rally of 2019, which saw a 330% increase in Bitcoin’s price to a high around $14,000 from its November 2019 low of $3,250. Recently, the BTC/USD pair is up 60% from its November 2022 low.
On-chain and market indicators relative to the 2019 rally are sending mixed signals as to whether or not Bitcoin’s rally will continue. Nevertheless, there is strong reason to believe that the market has reached a crucial turning point at which it could turn into a full-fledged bull market or revert to a long-term bear trend.
Let’s take a look at the top five indicators to understand the current price dynamics versus the 2019 bull run.
Bitcoin is tackling historic trading levels
Bitcoin’s price surpassed its 200-day moving average (MA) at $19,600, which could encourage paper traders to open a long position. Historically, this metric has acted as a bull-bear pivot line, with pimples above it being bullish and vice versa.
BTC/USD usually retests the 200-day MA on a breakout, raising the possibility of a correction towards USD 19,500. However, this was not the case in 2019, when the price continued to rise without falling back to the 200-day MA.
At the same time, traders are likely to pay attention to the 200-period weekly moving average of $25,100. The Bitcoin price had never fallen below the 200-week MA until November 2022, and regaining this level could encourage tech buyers to join.
However, until a breakout happens, traders can stay on the sidelines. Funding rates for perpetual swap contracts are currently neutral, suggesting traders are waiting for confirmation.
Crypto Twitter trader, Immortal, found that the market is only “half way through” given the duration of the current rally compared to the one in 2019. The 2019 rally lasted 193 days from bottom to top, while only 92 days have passed since the bottom on November 9, 2023.
Immortal goes on to say that if the 2019 timeline fractal is correct in 2023, BTC/USD could rise to $46,000 by March.
A stablecoin supply ratio oscillator is close to the 2019 high
Bitcoin’s stablecoin supply ratio (SSR) oscillator measures the buying power of the market. The indicator measures the relationship between Bitcoin’s market capitalization and stablecoin supply. Low values on the SSR oscillator indicate higher purchasing power of stablecoins. Conversely, a spike in the statistic indicates overbought conditions.
Bitcoin’s price surge in February 2023 caused the SSR oscillator to rise to levels not seen since 2019 and 2021. The indicator suggests that the positive trend could end soon. There is a small chance of a final push higher towards the psychological level of $30,000.
However, the data can be taken with a grain of salt due to the regulatory crackdown on the BUSD stablecoin, which caused a significant drop in supply. It may have skewed the SSR oscillator to show overbought conditions.
One of the main concerns of the current gulf is the lack of whale purchases. Unlike 2019, when the number and holdings of BTC addresses increased by more than 1,000 BTC as the price rose from the bottom and the whales have been sold in the current rally. The difference between the number of whales and the price raises concerns about the sustainability of the positive trend.
Data highlights a key bull-bear pivotal point
Investors increase their winning positions on pullbacks in an uptrend and this is signaled when the spent output earnings ratio (SOPR) indicator remains above one. The opposite happens in a downtrend where bears dominate the market by selling during rallies. A crossover of the metric above 1 is a potential trend reversal signal.
Glassnode’s 7-day moving average of the modified SOPR indicator shows that the bear trend is likely to have turned. The indicator turned bullish when BTC broke above USD 20,800 in January 2023. The statistic retested the crucial support level with Bitcoin price at $21,800 making it a crucial support level for a continued uptrend.
Related: Bitcoin is closing weekly or monthly with a macro bull trend at stake
Likewise, the price has risen above the average buying level of both short and long-term holders, which is another signal of a possible trend reversal. This could be a sign that the market has reached a crucial turning point as the on-chain oscillators are rebalancing.
The stats also indicate that a potential bull trend seems likely as the price remains above support at $21,800, $20,800 and $19,600.
A weekly close above $25,100 could encourage derivatives and technical traders to join the current rally, but there are some warning signs that the market may be overheating and a quick correction to lower support levels cannot be ruled out.
The views, thoughts and opinions expressed here are those of the authors only and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain any investment advice or recommendations. Every investment and trading move involves risk and readers should do their own research when making a decision.
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