- Analysts identified key Bitcoin indicators that predict a bottom in the asset over the next few weeks.
- Based on Bitcoin’s recent major pullback, analysts believe BTC could drop lower than $25,000 before it hits bottom.
- $40,000 continues to remain a possibility for Bitcoin price in continuation of the 2018 pattern in the asset.
Analysts have evaluated Bitcoin’s indicators and identified a bottom in BTC. Experts believe Bitcoin price could wipe out its losses and eye a $40,000 target in the next few months based on the indicators.
Bitcoin price could bottom soon, according to these indicators
Bitcoin price plummeted below $30,000 yet again as sentiment among investors turned bullish. The asset has struggled to make a recovery and wipe out losses from the last four weeks. Benjamin Cowen, a leading crypto analyst, identified three key indicators that offer insights on when Bitcoin will bottom.
One indicator used to identify Bitcoin pullbacks and predict the occurrence of a cycle bottoms is the Bitcoin one year running ROI calculated as a profit multiple on holding BTC for a year.
A drop to 0.4 or 0.3 in the one-year running ROI implies the asset is close to a market cycle bottom. The current value of Bitcoin one year running ROI is 0.647 which means Bitcoin price has yet to hit bottom, and the asset is unlikely to hit the level in May 2022.
Bitcoin 1 Year Running ROI
Another indicator identifying a market cycle bottom for Bitcoin is the percentage of supply in profit and loss. Separate lines indicate the two percentages on the chart. Every time the percentage of supply in profit crosses the supply in loss, it indicates that Bitcoin has hit a market cycle bottom.
Analysts have observed the occurrence of the pattern in the last two Bitcoin cycles. This event has yet to occur, however, the two lines are headed toward one another. A Bitcoin bottom, therefore, could be a few weeks to months away.
Percentage of Bitcoin supply in profit and loss
The Puell Multiple, calculated by dividing the daily issuance value of Bitcoin by the 365-Day Moving Average, is a metric used to estimate the level of sell pressure on BTC from miners. Historically, miners sell Bitcoin to cover their operating costs, and their revenue consists of block subsidies awarded to them. The USD value of block subsidies changes nearly every day, with volatility in Bitcoin prices.
Benjamin Cowen noted that a market cycle bottom is generally indicated by a drop in the Puell Multiple to 0.4 or lower. The BTC Puell Multiple value is currently above 0.59, indicating that we are close to a bottom but not yet quite there; therefore the asset’s price could plummet further to below $25,000.
Bitcoin Puell multiple
Three leading indicators signal that Bitcoin bottom is not in. Therefore, Bitcoin price could plunge further in the current market cycle before it finally hits bottom.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.