16 May 2022 18:40, UTC.
Reading time: ~2 m
Analysts evaluated bitcoin indicators and determined the bottom of BTC. Experts believe that the price of bitcoin can still compensate for its losses and, based on the indicators, in the next few months again reach the mark of $ 40,000.
Now, however, bitcoin’s price has fallen back below $30,000 and has descended to the $29,300 level. In this regard, crypto analyst Benjamin Cowan has identified three key indicators that provide insight into when bitcoin will bottom out.
One of the indicators used to identify bitcoin pullbacks and predict the occurrence of a cycle bottom is bitcoin’s one-year ROI, calculated as a multiplier of profits from holding BTC for a year.
A one-year drop in ROI to 0.4 or 0.3 means the asset is near the bottom of the market cycle. Bitcoin’s current ROI for one year is 0.647, which means that BTC’s price has not yet reached the bottom.
Another indicator that determines the bottom of bitcoin’s market cycle is the percentage of supply in profits and losses. These are marked on the charts with separate lines. Every time the supply percentage in profit crosses the supply percentage in loss, it indicates that bitcoin has reached the bottom of the market cycle.
Analysts have seen the pattern emerge in the last two bitcoin cycles. Currently, this event has not yet occurred, but the two lines are moving towards each other. Thus, the bottom of BTC may be reached in a few weeks or months.
The Puella multiplier, calculated by dividing the daily issuance value of bitcoin by the 365-day moving average, is a metric used to estimate the level of pressure from miners to sell bitcoins.
Historically, miners sell bitcoin to cover their operating costs, and their income consists of the rewards they are awarded per block. Their value changes almost every day due to the volatility of the BTC price.
Benjamin Cowan noted that the bottom of the market cycle is usually defined by a drop in the Puell Multiplier to 0.4 or below. The value of the BTC Puell Multiple is currently above 0.59, indicating that we are close to the bottom, so the price of the asset may fall below $25,000.
Three indicators are signaling that bitcoin’s bottom has not yet been reached. Consequently, the bitcoin price may fall even more, although that may not happen.
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