- BTC’s open interest dropped sharply when its price plummeted.
- The Fear & Greed index revealed that the market was in a “fear” phase.
Bitcoin’s [BTC] price once again dropped under the $26,000 mark, sparking fear among investors. The king of cryptos has been reluctant to turn its price action bullish for months as it failed to breach $30,000. However, if history is to repeat itself, BTC will soon enter a bull market.
Read Bitcoin’s [BTC] Price Prediction 2023-24
This possibility seemed likely as an important metric showed a similar pattern as in 2019, after which BTC’s price skyrocketed. Not only that, but other indicators also gave a notion that Bitcoin might witness a rally in the near term.
Bitcoin to ditch the bears?
James V. Straten, a crypto analyst, pointed out that Bitcoin was trading below the short-term holders cost basis, which was $28,680, for the third consecutive day. A similar pattern was also noted in 2019, when BTC left the bear market bottom. Therefore, this gave hope that BTC might witness a bull rally over the coming months.
Currently, #Bitcoin is trading below the STH cost basis ($28,680) for the third consecutive day. In June, it traded below for 10 days.
A similar pattern emerged back in 2019 when we left the bottom of the bear market. #Bitcoin went from $12,500 to $6,500 and traded below STH… pic.twitter.com/rJALsR4BqK
— James V. Straten (@jimmyvs24) August 20, 2023
A look at Bitcoin’s derivatives market also suggested that the coin’s price could go up. For instance, when BTC’s price plummeted, its open interest also went down. A drop in the metric generally results in a trend reversal.
Source: Coinglass
These metrics support an uptrend
Another positive development was highlighted by Glassnode Alerts’ tweet. The tweet mentioned that BTC’s aSOPR (7d MA) just reached a 5-month low of 0.99251. This indicated that more investors were selling at a loss.
When such episodes happen, they generally indicate a possible market bottom, increasing the chances of a price uptrend in the coming days.
📉 #Bitcoin $BTC aSOPR (7d MA) just reached a 5-month low of 0.99251
Previous 5-month low of 0.99283 was observed on 16 June 2023
View metric:https://t.co/yJqatjFTgP pic.twitter.com/9NK1WlKrsD
— glassnode alerts (@glassnodealerts) August 21, 2023
A few other metrics also looked bullish on BTC. For instance, the coin’s exchange reserve was declining, suggesting that it was not under selling pressure. Miners also seemed to be confident in BTC, as the miners’ position index (MPI) was green, meaning that they were selling fewer holdings compared to its one-year average.
Is your portfolio green? Check the Bitcoin Profit Calculator
Like miners, long term holders’ movements in the last seven-days were lower than average, reflecting their confidence in Bitcoin. On top of that, at the time of writing, Bitcoin’s Fear & Greed Index had a value of 38, revealing that the market was in a “fear” phase, which is generally followed by a hike in the asset’s value.
At press time, BTC was trading at $25,953.27 with a market capitalization of over $505 billion.
Source: CryptoQuant