Bitcoin Criterion Suggests Potential Market Turnaround Despite Bearish Sentiment
Summary:
Despite a 17% dip in Bitcoin (BTC) price, bringing a prevailing bearish sentiment, popular cryptocurrency analyst On-Chain College identifies potential signs of market recovery. The Bitcoin Mayer Multiple, a key price indicator, suggests a "healthy sentiment reset," having reached eight-month lows. While Bitcoin’s Relative Strength Index (RSI) has also entered the 'oversold' territory, both indications could suggest an imminent turnaround, despite the ongoing market stagnation.
Despite Bitcoin's (BTC) current stagnation at around $60,000, a significant bearish sentiment prevails, primarily due to a 17% price drop. However, On-Chain College, a popular cryptocurrency analyst, expressed on social media platform X that the Bitcoin Mayer Multiple has reached its lowest point since October 2023, which could signal a potential recovery. The Mayer Multiple, designed by Trace Mayer, compares Bitcoin’s present price to its 200-day moving average. A result of less than 2.4 is typically seen as a "buy" indication.
As per Glassnode, an on-chain analytics firm, the Mayer Multiple value was about 1.05 on June 26. To reach the 2.4 level, Bitcoin's price would need to escalate to nearly $140,000. Interestingly, the last time the Mayer Multiple exceeded the 2.4 reading was in March 2021.
On-Chain College, in its statement, relayed that the Mayer Multiple is currently at a similar level as it was in October 2023, despite Bitcoin's price growing from $29.9K to its current $60.9K. The analyst suggested this reflected a substantial shift in sentiment — from bullish to bearish — though the price is essentially double what it was previously.
However, exceptionally low Mayer Multiple readings are not necessarily indicative of Bitcoin price bottoms. In fact, the Mayer Multiple anticipated the bear market's bottom by approximately four months in mid-2022.
Besides the Mayer Multiple, the Relative Strength Index (RSI) of Bitcoin has also ventured into the oversold zone across numerous timeframes. The last time RSI was at this depth was in August 2023, when trends indicated similar breaches in bull market benchmarks like the short-term holder cost basis.
Trading analyst Jelle highlighted similarities between the current situation and the three-month consolidation period below $30K when the RSI was last so low, suggesting an analogous phase of stabilization below $70K might currently be underway.
To conclude, despite the currently declining sentiment, both Mayer Multiple and RSI levels suggest a potential market turnaround. Notwithstanding these indicators, prospective investors and traders are advised to independently evaluate the risk involved before proceeding.
Published At
6/27/2024 10:21:25 AM
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