Key facts: According to technical indicators, Bitcoin could be in a pause of the uptrend. The coin is currently trading around $60,000. According to the analysis firm Lookonchain, there are 5 indicators that suggest that the top of the uptrend for Bitcoin (BTC) has not yet arrived. These indicators can signal good moments to “escape” from the market. One of them is the relative strength index (RSI), which measures the momentum of an asset’s price movements. When this metric is above 70, on a scale ranging from 0 to 100, it indicates that the asset is overbought. On the other hand, when it is below 30 it reflects that it is oversold and could soon experience an uptrend. Currently, Bitcoin’s RSI is close to 60, which means that does not look overbought as it has been previously in its bullish trends. Therefore, “compared to previous data, it seems that BTC has not yet reached its peak,” distinguishes Lookonchain.
Bitcoin Relative Strength Index (RSI). Source: Bitbo. Another indicator is the Bitcoin price heatmap, based on the 200-week moving average that reflects its long-term trend. This metric shows in colors close to red when the price is well above this line and in blue when it is close. Throughout history, Bitcoin has spent little time below the 200-week moving average, which shows that this area usually acts as a bottom. Thus, colors close to red on the heatmap usually indicate good selling times, while colors close to blue indicate buying times. This metric is currently in light blue, as seen below. Lookonchain highlights that this means that Bitcoin has not yet reached its maximum price and —according to this indicator— it is time to hold and buy. The analyst firm points to the accumulated value of coins destroyed (CVDD) as another key indicator. This measures how long BTC holdings have been stored before they were moved. Under this check, it identifies that when the movements of the holders increase, it can be an indication of selling pressure. When the price of BTC touches the CVDD line, it suggests that the price is undervalued and is a good buying opportunity. Currently being far from this, as seen below, “the maximum of BTC does not seem to have been reached yet,” says Lookonchain.
The green line is the CVDD indicator, while the candles reflect the price of bitcoin. Source: TradingView. The 2-year moving average multiplier is another indicator that the analysis firm observes. This metric multiplies the moving average by five, since the price has tended to rise by that in uptrends. Therefore, when the price falls below the 2-year moving average (green line) it has historically shown a good buying moment. And, when it exceeds the 2-year moving average x 5 (red line) it has historically been effective for making profits. Currently, bitcoin is between both lines, as seen below, indicating that it has not yet finished its uptrend if it repeats the historical pattern. So far, The coin approached the red line at the end of every bullish cycle in its pastBitcoin's current bullish trend began in early 2023, when it began to recover from the bear market. Since then, its price has appreciated by 275%. This is despite the fact that for the past five months it has remained in a range below the new all-time high it set at USD 73,700. It is currently trading at around USD 60,000.
It is crucial to investigate what is behind each bitcoin indicator
Lookonchain also points to the rainbow chart, shown below, as a tool for predicting the price of bitcoin. However, it should be noted that it seems to make a mistake here, which is common in the cryptocurrency community, as this metric has been created as a joke. It is a logarithmic metric that shows in the upper colors when the coin is at the end of an uptrend and below when it is at the bottom of the bear market. However, this It is updated over time to keep pace with price movements.without functioning as an indicator. As reported by BitcoinDynamic, Holger, in charge of updating the graph on the BlockchainCenter website, said that its creator was a user of the Reddit forum. This user, pseudonym Azop, published images of said metric during the bitcoin bull market in 2017, which Holger decided to continue in an updated online version. “The rainbow chart was never a serious attempt to model or predict the price of bitcoin,” Holger commented. On his website, he clarifies that it is intended to be a fun way to see the historical movements of the price in the long term, without taking into account the daily “noise” of volatility. According to Ki Young Ju, CEO of CryptoQuant, an on-chain data analysis provider, the bitcoin bear-bull market cyclical indicator is one of those that gives an idea about the current panorama. It measures the difference between the loss and profit ratio of bitcoin investors, according to their 365-day moving average. According to this metric, There is a bull market when investors are mostly in profits.while bearish when they are in losses. This metric has recently momentarily fallen into bearish mode, as seen below, so it seems key to continue watching it.
Cyclical indicator of the bearish and bullish market. Source: CryptoQuant. With all this in perspective, investors should know that it is crucial to investigate what is behind each market indicator and refrain from analyzing them individually. Otherwise, one can fall into erroneous projections for trading.