Bitcoin Bull Run May Be Waning, On-Chain Metrics Indicate Uncertain Market
Summary:
Bitcoin (BTC) might be nearing the end of its macro bull trend, as indicated by the historically reliable 'value days destroyed' (VDD) multiple. The measure has previously successfully predicted BTC price peaks. Analysts studying on-chain metrics express concern, despite others still expecting BTC price discovery to recover. Classic indicators, like the relative strength index (RSI), have provided cautious optimism, hinting at a potential uptrend continuation. However, investment decisions should always take into account inherent risks and be based on comprehensive research.
According to an historically reliable on-chain metric, Bitcoin (BTC) might be approaching the end of a macro bull trend. This is indicated by the high value of the 'value days destroyed' (VDD) multiple, which has previously predicted BTC price peaks. Currently, Bitcoin is unable to convert either its 2021 peak or recent all-time highs into firm footholds. While some anticipate a recovery in Bitcoin price discovery, others analysing on-chain metrics express worry. One such analyst is TXMC, host of YouTube channel Alpha Beta Soup. This week, TXMC shared VDD multiple data indicating a high level previously associated with the culmination of BTC/USD macro trends.
The VDD multiple contrasts on-chain spending with historical averages, determining when market sentiment may be directing a price climax. The term 'value days destroyed' refers to the duration for which coins remain inactive when circulating on-chain. When the VDD multiple reached 3.5 in March, it was deemed as 'overheating' by TXMC.
There is however a significant difference between this year and early 2021. During the prior VDD multiple hike, BTC/USD had already twice surpassed its previous high of $20,000. In addition, other chart metrics have been injecting a dose of cautious optimism into the market. Classic indicators such as the relative strength index (RSI), which recently dipped to the level last seen in January, are among them. As per Cointelegraph Markets Pro and TradingView, on April 10th, the daily RSI was at 53, still considerably below the typical 'overbought' zone of 70.
Popular trader Jelle noted the possibility of a bounce during Bitcoin's daily RSI retest of ±50. Meanwhile, trader Alan Tardigrade pointed to promising signs in the form of a hidden bullish divergence within 4-hour RSI timeframes. This occurs when BTC demonstrates a higher low, but RSI records a lower low, thus indicating a potential uptrend continuation.
Monthly timeframes above 70 also persist, drawing the attention of controversial analyst Plan B and others, in anticipation of Bitcoin's forthcoming block subsidy halving. This news article is intended for informational purposes only and does not constitute investment or trading recommendations. Investment and trading activities inherently carry risks and readers are encouraged to conduct their own research prior to making decisions.
Published At
4/10/2024 1:01:48 PM
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