Technical Indicators Show Multiple Bitcoin Bull Market Signals
The recent resurgence of Bitcoin saw a new nine-month high in the mid-$26,000s on Tuesday and has been accompanied by several key technical indicators returning to positive territory, once again sending a bullish signal for BTC.
Although the Bitcoin price has dropped back below the $25,000 mark during the Wednesday Asia Pacific session, BTC has still recorded a gain of over 27% versus last week’s lows in the mid-$19,000s. At that time, concerns about a series of high-profile failures of crypto-friendly banks, start-ups, and tech companies weighed on the price.
However, bulls aggressively defended key long-term levels in the form of the 200DMA and Realized Price (both in the $19,700–800 range). Furthermore, news over the weekend that US authorities would be stepping in to protect depositors and introduce a new $25 billion bank liquidity program to strengthen balance sheets helped propel BTC higher.
Other key narratives fueling the rally include the idea that concerns about financial stability make significant further tightening by the Federal Reserve much less likely. Additionally, financial stability concerns boost the appeal of Bitcoin, which represents an alternative, decentralized financial system.
The strong defense of its 200DMA and Realized Price by Bitcoin has also helped spur confidence in the rally. After showing some signs of weakness last week, the latest rally has sent a number of key on-chain metrics trending in the right direction.
More specifically, if Bitcoin can maintain its recent gains and/or extend its upside towards the next key resistance at just above $28,000 (as many technicians now anticipate), the crypto analytics firm Glassnode’s widely followed “Recovering from a Bitcoin Bear” dashboard of on-chain and technical indicators is likely to once again start flashing a bullish signal.
Glassnode’s “Recovering from a Bitcoin Bear” dashboard tracks eight indicators to ascertain whether Bitcoin is trading above key pricing models, whether network utilization momentum is increasing, whether market profitability is returning, and whether the balance of USD-denominated Bitcoin wealth favors the long-term HODLers.
When all eight indicators are flashing green, this has historically been a strong bullish sign for the Bitcoin market. At present, seven of the eight indicators are flashing green, with Bitcoin trading comfortably above its 200DMA and Realized Price, the first two indicators. A break above these key levels is viewed by many as an indicator that near-term price momentum is shifting in a positive direction.
The 30-Day Simple Moving Average (SMA) of new Bitcoin address creation moved above its 365-Day SMA a few months ago, indicating that the rate at which new Bitcoin wallets are being created is accelerating. This has historically occurred at the start of bull markets.
Regarding market profitability, despite pulling back sharply in recent days to reflect the recent drop in the Bitcoin market, the latest reversal to new nine-month highs has kept the 30-Day SMA of the Bitcoin Realized Profit-Loss Ratio (RPLR) indicator above one. That means that the Bitcoin market is realizing a greater proportion of profits (denominated in USD) than losses.
According to Glassnode, “this generally signifies that sellers with unrealized losses have been exhausted, and a healthier inflow of demand exists to absorb profit taking”.