A bullish case isn’t on a lot of people’s minds – but there are signs cropping up that Bitcoin may indeed be headed for a trend reversal. Here are some signs explaining why BTC might be overdue for a renewed uptick.
Bitcoin reached its all-time high of almost $65K on April 14, 2021, a little over a month ago. However, over the past 10 days the price violently broke down from the $50K mark and even reached $30K last Wednesday.
The bearish sentiment affected the whole crypto market, as altcoins suffered even more: ETH, which saw its all-time high of $4400 just 11 days ago, dropped earlier today below $1800, before a slight correction as of writing these lines.
Where is the bottom for this ongoing crypto bloodbath? no one knows, but it might be worth keeping an eye on the following optimistic signals.
Crypto Fear & Greed Index: Remember April 2020?
The crypto fear & greed index is now at levels not seen since April 2020, which is about the time when the last crypto market crash occurred, taking BTC down below $4,000, losing over 50% in two days at the peak of the pandemic “Black Thursday.”
The Crypto Fear & Greed Index is now at levels not seen since April 2020, which just happens to have been the greatest buying opportunity in history. pic.twitter.com/BYf4CzBIEr— Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) May 23, 2021
In hindsight, it was an amazing time to buy in, but it wasn’t necessarily obvious back then. These days, Bitcoin has fallen over 50% from its ~$65,000 high down to $30,000 on Wednesday – is the index right once again, and is this crash a blessing in disguise for people with stablecoins on the sidelines?
here are some times in the last 2 years fear and greed was sub 15.— Bluntz (@SmartContracter) May 23, 2021
make of it what you will. pic.twitter.com/TlLe7B7Q5C
S2F Model: Lower Band At $30K
Similarly, the stock to flow (S2F) model indicates that BTC is due for an upwards rebound at the $30,000 mark given its stage in the cycle. The S2F model treats Bitcoin as a commodity (given that it has a fixed supply and limited issuance, similar to gold) and thus factors in circulating supply and production speed in order to determine scarcity and therefore price.
#bitcoin oscilates in the dark blue band around S2F model value. Buying opportunities like today are rare (Q1 2019 when I wrote the S2F article, March 2020 due to covid, and now). Life is all about choices. https://t.co/rlb5dsIFSg pic.twitter.com/rQpTvzR3eW— PlanB (@100trillionUSD) May 22, 2021
The S2F model and 4-year cycle have, in Bitcoin’s short history, been proven to be reliable. As been stated by PlanB, the creator of the mode: “The continuation of this crash into the next few weeks (effectively the end of the bull cycle) would invalidate the S2F model and 4-year cycle model,” which have so far been sound – many analysts predict that it’s not yet time for things to turn around for the worse.
Actual #bitcoin price is at the lower bound of S2F model. Am I worried? No. Lower band is ~/2, upper band ~*2:— PlanB (@100trillionUSD) May 23, 2021
– upper band: $120k
– model price: $60k
– lower band: $30k
It is not OK if we stay at $32K for multiple months, but I expect BTC price to bounce back next days/weeks. https://t.co/XvQybWBNds
S2F currently plots the lower band at $30K, which is this week’s current low.
On-Exchange Stablecoins At ATH, Waiting Aside?
The amount of stablecoins on exchanges is at a yearly ATH – Lex Moskovski opines that there are ‘a lot of bullets waiting to be deployed from the sidelines.’
Of course, this could merely be a function of a large number of new entrants into the cryptocurrency ecosystem, but it most likely means big players are gearing up to bring in large buys.
In addition, John Bollinger, the creator of the Bollinger Bands indicator, believes that BTC might be nearing a local double bottom.
All of these indicators come together and paint a better picture of Bitcoin’s immediate short-term potential than the market is making it out to seem. After the past few days’ waves of incessant bearish moves, it may be time for BTC to take a breather, as RSI indicates that we are heavily oversold.
Vaporware Altcoins Bleeding Out – BTC Dominance Rising
It’s clear that altcoins have more to worry about – Bitcoin dominance has hit a local bottom at ~40%, and has been steadily trending upwards (currently sitting at 47%). It’ll most likely recover even more as the market sheds off the excess weight that had been added on by vaporware coins fuelled by the speculative altcoin mania bubble.
Those dogecoin copycats can be easily referred as “dumb money” and “weak hands.” Once those hands are gone – the smarter money will return to the large-caps cryptocurrencies and most likely, to the king of them, which is Bitcoin.