On-chain data suggests that Bitcoin is staging a recovery like in December 2018 and March 2020.
Bitcoin (BTC) is still below a key moving average and that is “not a bullish sign,” says a new report, but signs of a rebound have finally arrived.
In its latest market update released on June 11, trading suite Decentrader highlighted three on-chain indicators calling for an imminent bullish continuation for BTC/USD.
Indicators echo March 2020 aftermath
Bitcoin has now spent almost a month below its 200-day moving average (DMA). This is concerning, Decentrader warns, and external factors such as geopolitical sentiment continues to weigh on sentiment.
“Bitcoin has kept the market on its toes as it continues to range between weekly support at $32,000 and near term resistance of the 200DMA currently at $42,000,” the update summarized.
“Uncertainty after the recent crash and fears around President Biden’s announcement at the G7 Summit this coming weekend around how the US will tackle cryptocurrency in relation to recent ransomware attacks, are holding price down for now.”
Bitcoin continued to range over the weekend, at the time of writing trading near $36,000 amid few signs of quashing resistance closer to $40,000.
Fortunately, however, several measures of on-chain strength now suggest that the bounce from a bearish phase within an overall bull market is now underway.
These are well known — active addresses sentiment, spent output profit ratio (SOPR) and stock-to-flow deviation. The two latter have been extensively covered by Cointelegraph.
Active addresses, meanwhile, measures whether Bitcoin is overbought or oversold at a certain price point relative to the number of active addresses on the blockchain.
Like SOPR, the indicator is currently in the same position as just after the bear market floor in December 2018 and the crash of March 2020.
As such, if history repeats itself, the only way is up.
“We received the same signal yesterday, suggesting that $BTC price was oversold relative to active addresses on-chain and could now be ready to bounce back over the coming weeks,” the update explained.
$85,000 within months?
Also on the cards is a rally back to the stock-to-flow trajectory line, something which its creator, PlanB, says would pose a “surprise” were it not to happen.
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Amid hopes that BTC/USD will still hit $100,000 this year, Decentrader predicted that it may only be a matter of months before Bitcoin is back on track.
“While we may not rally so hard and fast this time, fundamentally nothing has changed with how Bitcoin works, nothing is broken, we are just experiencing a lot of bad media coverage after a strong rally at the start of the year,” the company concluded.
“So we may well see price make its way back up to the stock to flow line in the coming months. This would mean new all-time highs for $BTC before the end of this year, as the Stock to Flow line is currently sitting at $85,000.”