in conclusion

Bitcoin has rebounded rapidly recently, finally awakening from its long-term sideways trading at the end of 2022. The rapid upward trend has forced many investors who panic-sold at the bottom to leave the market and wait and see.

Although the risk of a pullback still exists, it is likely that this is the early stage of a new bull market, and it may be the best time to increase your holdings of Bitcoin. After all, the market has eliminated many low-point sellers.

1. Price recovery to key technology price

At present, the K-line chart of BTC is as follows. After testing the support area B at the low point, the price has rebounded and broken through the A area. The A area was the main support level before the FTX crash.

Although there is a risk of a price correction, the strong trend in recent days has brought great positive sentiment to the market. If it continues to rise, the next target will be $24,690.

BTC chart

2. Cyclical indicators gain support at low points

The low price of BTC occurred in November after the FTX crash, when the CVDD (Cumulative Value Days Destroyed) and Balance Price indicators indicated that the price was likely to be a cycle low. As the current price rises away from the indicator, the support of the indicator low appears more reliable.

(CVDD and Balance Price Indicator)

3. Short Position Blow-up

Last month, the funding rate experienced a sustained negative rate. This is extremely unusual for Bitcoin. Generally speaking, the BTC funding rate is flat or positive. This indicator is generally a leading reference for an upward trend.

Sustained negative funding rates usually foreshadow major lows in Bitcoin prices. This is because traders become overly pessimistic and begin to add to their short positions in anticipation of further price declines. Whenever this happens, prices accelerate higher, and short squeezes further push prices higher.

(Financing rate index)

4. Miners’ selling ends

2022 has been a tough year for BTC miners, with increasing electricity costs, the bankruptcy of lending institutions, and falling prices forcing miners to sell Bitcoin.

Miner stress can be demonstrated by the Puell Multiple indicator below, which shows mining reward revenue relative to historical norms (using a one-year moving average as a norm). Miner stress is greatest when the indicator falls into the green accumulation band. This usually marks the low point of the market cycle, as miners are under pressure at this moment and can only sell Bitcoin at the lowest price.

Currently the Puell Multiple indicator is rebounding from the green accumulation band, which may mark the end of the bear market and the beginning of a new bull market.

(Puell Multiple indicator)

Another indicator, the hash belt indicator, also shows that Bitcoin prices may continue to rise in the short term. In 2022, many miners shut down their mining machines and were forced to sell Bitcoin, causing the difficulty adjustment and hash rate changes to cross on the hash belt. This crossover means that the industry has a chance to breathe after a period of severe pressure.

With the general return of market confidence, this trend change will ease BTC's downside risk in the short term, and the reduction of forced selling will also have a chain reaction and have a positive impact on prices. As shown in the figure below, when the red bar disappears due to price increases, the hash belt moving average also shows an upward trend.

(Hashband Indicator)

5. The market returns to profitability

The realized price indicator is the average cost of the entire market. It is a very useful reference indicator when the market is under pressure. When the BTC price falls below the realized price, it often marks the main low point of the bear market.

After being below the realized price for several months, despite some short-term fluctuations, the 20% increase directly brought the price above the realized price indicator.

(Realized Price Index)

Most forced and panic selling occurs at lows. This sentiment chart can be seen in the figure below, where we can see that the sentiment indicator MVRV Z-Score is in the window period of breaking away from the green accumulation band.

(MVRV Z-Score indicator)

We may be experiencing the best time to accumulate Bitcoin before a new bull run begins!