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Bitcoin – Identifying the odds of a new rally after BTC hit THIS critical level

August 31, 2024
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Bitcoin – Identifying the odds of a new rally after BTC hit THIS critical level
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  • Selling sentiment continued to remain dominant in the derivatives market
  • However, the NVT ratio indicated that Bitcoin was undervalued

Bitcoin [BTC] lost its bullish momentum last week as its price plummeted significantly, but the trend might change soon. In fact, investors’ shouldn’t lose hope as a key metric hit a level that is rarely hit. 

Hence, AMBCrypto checked the king of cryptos’ state to see how soon it could regain bullish momentum on the charts. 

Bitcoin hits a critical level

Bitcoin’s price has fallen by over 8% in the last seven days alone, with BTC valued at $59,044 at press time with a market capitalization of over $1.16 trillion.

In the meantime, Axel Adler Jr., a popular crypto analyst, recently shared a tweet revealing an interesting development. His analysis used BTC’s average exchange inflow/outflow ratio. The metric indicated strong buying pressure, with this being the sixth time this has happened in the last ten years.

Looking back at history, each time the metric has flashed buying pressure, BTC’s price has appreciated on the charts. To be precise, such incidents happened back in 2017, 2020, and 2023.

Since the metric has once again hit that critical level, there are chances of BTC bulls stepping up and helping push BTC’s price in the coming days. 

Source: X

Is a trend reversal around the corner?

Since there were chances of a bullish trend reversal, AMBCrypto took a closer look at BTC’s current state to better understand what to expect from it.

Our analysis of Glassnode’s data revealed that BTC’s NVT ratio dipped. Generally, a drop in the metric means that an asset is undervalued, hinting at a price hike. 

BTC's NVT ratio dropped

Source: Glassnode

According to CryptoQuant’s data, BTC’s exchange reserves have been dropping too, meaning that buying pressure has risen. On top of that, the king coin’s binary CDD was green. This suggested that long-term holders’ movement over the last 7 days was lower than the average. They have a motive to hold their coins.

See also  Bitcoin to $225,000? Analysts predict a profitable year for Bitcoin mining stocks

However, things in the derivatives market didn’t look good. For instance, BTC’s funding rate declined. Moreover, its taker buy/sell ratio revealed that selling sentiment was dominant across the derivatives market. 

BTC's funding rate dropped

Source: CryproQuant

Therefore, we then assessed BTC’s daily chart to see what technical indicators suggested regarding a trend reversal.

The MACD flashed a bearish crossover. Bitcoin’s Relative Strength Index (RSI) took a sideways path. Both of these indicators suggested that the bearish price trend might continue. 


Read Bitcoin’s [BTC] Price Prediction 2024–2025 


However, the Chaikin Money Flow (CMF) gave slight hope of a trend reversal, and it moved north towards the neutral zone. 

Source: TradingView

Next: Ethereum… In a bull market? Here’s why it’s not as wrong as you think

READ ALSO

Bitcoin nears $91K as buying pressure soars, but challenges emerge

Spot Bitcoin ETF Options – How U.S exposure is set to soar after CFTC’s notice

  • Selling sentiment continued to remain dominant in the derivatives market
  • However, the NVT ratio indicated that Bitcoin was undervalued

Bitcoin [BTC] lost its bullish momentum last week as its price plummeted significantly, but the trend might change soon. In fact, investors’ shouldn’t lose hope as a key metric hit a level that is rarely hit. 

Hence, AMBCrypto checked the king of cryptos’ state to see how soon it could regain bullish momentum on the charts. 

Bitcoin hits a critical level

Bitcoin’s price has fallen by over 8% in the last seven days alone, with BTC valued at $59,044 at press time with a market capitalization of over $1.16 trillion.

In the meantime, Axel Adler Jr., a popular crypto analyst, recently shared a tweet revealing an interesting development. His analysis used BTC’s average exchange inflow/outflow ratio. The metric indicated strong buying pressure, with this being the sixth time this has happened in the last ten years.

See also  U.S. to sell Silk Road Bitcoin: 69,370 BTC to enter market

Looking back at history, each time the metric has flashed buying pressure, BTC’s price has appreciated on the charts. To be precise, such incidents happened back in 2017, 2020, and 2023.

Since the metric has once again hit that critical level, there are chances of BTC bulls stepping up and helping push BTC’s price in the coming days. 

Source: X

Is a trend reversal around the corner?

Since there were chances of a bullish trend reversal, AMBCrypto took a closer look at BTC’s current state to better understand what to expect from it.

Our analysis of Glassnode’s data revealed that BTC’s NVT ratio dipped. Generally, a drop in the metric means that an asset is undervalued, hinting at a price hike. 

BTC's NVT ratio dropped

Source: Glassnode

According to CryptoQuant’s data, BTC’s exchange reserves have been dropping too, meaning that buying pressure has risen. On top of that, the king coin’s binary CDD was green. This suggested that long-term holders’ movement over the last 7 days was lower than the average. They have a motive to hold their coins.

However, things in the derivatives market didn’t look good. For instance, BTC’s funding rate declined. Moreover, its taker buy/sell ratio revealed that selling sentiment was dominant across the derivatives market. 

BTC's funding rate dropped

Source: CryproQuant

Therefore, we then assessed BTC’s daily chart to see what technical indicators suggested regarding a trend reversal.

The MACD flashed a bearish crossover. Bitcoin’s Relative Strength Index (RSI) took a sideways path. Both of these indicators suggested that the bearish price trend might continue. 


Read Bitcoin’s [BTC] Price Prediction 2024–2025 


However, the Chaikin Money Flow (CMF) gave slight hope of a trend reversal, and it moved north towards the neutral zone. 

Source: TradingView

Next: Ethereum… In a bull market? Here’s why it’s not as wrong as you think
Tags: BitcoinBTCCriticalhitidentifyingLeveloddsrally

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