Last week, the Bitcoin Chain Update indicated that most on-chain metrics are at multi-year lows while enough precedent suggests further gains to the upside. The MACD indicator has turned green, signaling that Bitcoin is bottoming out, which has caused a stir among traders.
If the US Federal Reserve (Fed) continues printing money, the US dollar will continue to drop further. That situation would lead Bitcoin (BTC) to become a future global reserve asset and a crucial store of value.
The Federal Reserve recently raised interest rates by 0.75%, causing stocks and cryptocurrencies to rise. However, the Fed and the White House may consider making a political change.
Jerome Powell, the chairman of the Fed, stated they were aware of the impact of their policy on markets. In addition, he said they recognized and considered the latency of interest rate hikes.
The Fed stated that the Committee would consider tightening the monetary policy to bring inflation back to 2% over time. They also said the delays affect economic activity, inflation, and financial developments.
However, the cryptocurrency market seemed to disagree with Powell, as Bitcoin, altcoins, and stocks pulled back their short single-digit gains. The price of BTC may return to the lower end of USD 21,000, as USD 20,000 seems to consolidate as support.
Intraday Bitcoin price movements in less than 24 hours seem irrelevant if investors seek gains in the long term. Instead of focusing on interest rise hikes, they should look at other metrics that assess the current structure of the Bitcoin market.
According to Chain Data, This Is the Best Time to Accumulate
Charles Edwards, the founder of Capriole Investments, introduced a new on-chain metric called Bitcoin Yardstick. He explained that lower readings are equivalent to cheaper Bitcoin and better value.
Like Glassnode, Edwards believes that long-term owners have capitulated. He said that net unrealized profits and losses (NUPL) show the elimination of long-term holders.
A recent Bitcoin Chain update indicates that most on-chain metrics are at multi-year lows. Besides, enough precedent suggests the gains to the upside exceed the potential to the downside.
The Bitcoin MACD Indicator Seems to Have Become Bullish
The moving average convergence divergence (MACD) also causes commotion in trading circles. Over the last week, several traders have noted a convergence between the signal line and the MACD indicator. The latter has turned green, signaling that Bitcoin is bottoming out.
Although investors should not view the indicator as an isolated signal, the weekly and monthly crossovers usually accompany a steady increase in bullish momentum.
The data cannot confirm whether the market is about to reach its bottom. However, comparing the current readings to previous market cycles and Bitcoin price action suggests undervaluation.
The value of BTC may bottom out, but that does not dismiss the possibility of sales related to the crypto market. In addition, equities might catalyze a quick fuse to the yearly low.
Meanwhile, Bitcoin is trading at around USD 21,340 and has accumulated a 3.4% gain over the last 24 hours. While its daily trading volume is above USD 422.31 billion, its market capitalization is about USD 409.70 billion, according to CoinGecko.
By Alexander Salazar
