Has Bitcoin hit bottom? Foreign media reveals 5 bullish indicators
Bitcoin briefly fell below $54,000 last week, hitting a five-month low, while the Crypto Fear and Greed Index fell to 27, on the fear level.
However, according to the compilation by Cointelegraph, a foreign media in the currency circle, five key indicators show that bulls may still have the upper hand, suggesting that Bitcoin prices are expected to recover.
Indicator 1: Bullish divergence appears on the RSI indicator
"Cointelegraph" pointed out that although Bitcoin has continued to fall recently, the relative strength index (RSI) on the daily line is rising from the lows, forming a bullish divergence state, which usually means that the price continues to decline, but the selling pressure is weakening.
In technical analysis, bullish divergence often indicates that there may be a reversal or a slowdown in the downward trend, market sentiment may turn bullish, and prices are expected to rebound soon.
Analyst Jacob Canfield pointed out that Bitcoin closed with a long lower shadow on July 5, US time, and the daily RSI fell near the oversold area of 30. If a rebound comes, Bitcoin is expected to rebound. Back above $70,000, breaking the previous range-bound high.
Image source: X/Jacob Canfield
Analysts note bullish divergence in Bitcoin RSI indicator
Indicator 2: Market expectations for an increase in interest rate cuts in September
CME Group Fed Observer data shows that the market currently expects a 72% chance that the U.S. Federal Reserve will cut interest rates in September, while the market forecast only had a 46.6% chance a month ago. This may be affected by the weak non-farm payroll data last Friday.
"Cointelegraph" pointed out that when the job market is weak, the Federal Reserve usually considers cutting interest rates to stimulate economic activity. Lower interest rates are generally beneficial for riskier assets such as Bitcoin, as traditional safe-haven investments (U.S. Treasuries, etc.) will become less attractive.
Source: CME Group Fed Observer
Indicator 3: U.S. Bitcoin ETF funds resume net inflows
Farside Investors data shows that the U.S. Bitcoin spot ETF has resumed net inflows after two consecutive days of net outflows last week. These ETFs attracted a total of $143.1 million in inflows after the U.S. non-farm payrolls data were released on Friday, indicating rising risk sentiment among Wall Street investors.
Among them, Fidelity’s product $FBTC attracted $117 million in funds, Bitwise’s $BITB had a net inflow of $30.2 million, while Ark Fund’s $ARKB and VanEck’s $HODL had inflows of $11.3 million and $12.8 million respectively.
Source: Farside Investors
U.S. Bitcoin Spot ETF Fund Flow Chart
Indicator 4: The U.S. money supply is expanding again
"Cointelegraph" pointed out that as of May 2024, the U.S. M2 supply has increased by approximately 0.82% annually, and the cumulative decline has narrowed from the peak decline of 4.74% in October 2023 to about 3.5%.
M2 supply measures the government's money supply, including cash, checking deposits, and easily convertible quasi-currencies such as savings deposits, money market securities, and other time deposits.
If the supply of M2 grows, it will benefit risky assets such as Bitcoin because it increases economic liquidity, while the returns on conservative investments such as savings and bonds will become lower.
Source: Fred
US Fed M2 supply
Indicator 5: Bitcoin miners surrender
CryptoQuant data shows that Bitcoin’s computing power has fallen by 7.7% after last week’s decline, close to the level when FTX went bankrupt at the end of 2022, which means that Bitcoin may be close to bottoming out. Miner capitulation occurs when miners reduce operations or sell some of their mined Bitcoins and reserves to stay afloat, earn income, or hedge their Bitcoin risk.
As weaker miners exit the market or scale back operations, more competitive miners will earn greater profits, potentially stabilizing operations and reducing the need to sell Bitcoin. "Cointelegraph" believes that these indicators indicate that the Bitcoin market may be near a bottom, similar to previous cycles, that is, the market usually ushered in a recovery after miner sell-offs and operational cuts.
Source: CryptoQuant
Bitcoin network hash rate (computing power) decline
[Disclaimer] There are risks in the market, so investment needs to be cautious. Analysts' opinions are for reference only. Users should refer to more diverse indicators to judge whether to invest, and consider whether any opinions, views or conclusions in this article are consistent with their specific circumstances. Invest accordingly and do so at your own risk.