Bitcoin Rises 12.5%, This Data Suggests Bottom Is Very Close

Bitcoin (BTC) fell sharply after the release of the US Consumer Price Index (CPI) on June 10. The panic set in and investors massively withdrew their money from riskier assets. It was only last week that bitcoin started to recover slightly and fears eased again. Meanwhile, the market is speculating vigorously as to whether bitcoin has finally bottomed out or will fall even deeper.

Bitcoin price rose 12.5% ​​last week.

More than a week ago, the bitcoin price fell just below $18,000, as low as $17,750. By Sunday morning, the bitcoin price had recovered slightly above $18,000 and was already above $20,000 on Sunday evening.

For the rest of the week, bitcoin remained in a very slight uptrend. Despite this, for the time being, the top remained at last Tuesday’s $21,600. Yesterday morning, bitcoin came close again, but was already rejected around USD 21,500 and then dipped again briefly below USD 21,000.

Bitcoin immediately made a big rebound and returned to $21,500 shortly after midnight. Over the night, bitcoin continued to fluctuate between $21,400 and $21,500 and the BTC price currently stands at $21,450 on Binance and $20,330 on Bitvavo. The BTC rate is therefore 0.5% in the minus today, but 12.5% ​​in the plus this week.

Market speculates on bitcoin bottom

The market is currently obsessed over whether bitcoin has bottomed out with its dip below $18,000. Opinions among analysts are very divided on this. Keep in mind that forming a bottom can be a process that will take months. Especially in these bleak macro conditions, a true trend reversal may still be a long way off.

Stock markets such as the S&P 500 and Nasdaq, with which bitcoin has been very highly correlated for months, historically usually only bottom when the Federal Reserve reverses policy. However, it seems that this too may still be a long way off. That said, the S&P 500 also had one of the best weeks of 2022 last week and bitcoin recovered faster than these markets after the hit in 2020.

On-chain data says bitcoin bottom is close

Analyst Amir Jafarzadeh shows in the chart below that the 30-day moving average of the so-called long term holder (LTH) spent output profit ratio (SOPR) but fell into loss territory three times before, and now it’s the fourth time. Each time this happened a macro bottom formed, but it was a process that took more than five months.

Analyst Plan C also reports that historically if the LTH SPOR shows weakness, usually the macro bottom is close:

However, as Rekt Capital points out, we still need to keep in mind that there is a significant lack of buyer volume, as we have seen during previous bottoms around the 200-week moving averages. The 200 WMA is currently just above USD 22,400.

More volatility may soon follow for bitcoin

Analyst Matthew Hyland has listed the release dates for US inflation figures in the chart below. The big blow that followed after 10 June is clearly visible. The next CPI publication will take place on 13 July. That could add to volatility, but if inflation rates turn out better than expected, the Fed may already become more cautious in its policy and fear and selling pressure may ease.

However, analyst IT Tech warns that volatility may be arriving sooner, as the so-called estimated leverage ratio and open interest on derivatives starting to rise again:

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