The recent price rally of Bitcoin (BTC) from $16,500 to $25,000 can be attributed to the short term in the futures market and the recent macroeconomic improvement. However, when prices rise, data shows that many interested buyers (including whales) are left behind.
The recent rally to $25,000 shows many similarities to the bear market rally of 2019, which saw a 330% increase in the price of Bitcoin to a high of around $14,000 from the November 2019 low of $3,250. Recently, the BTC/USD pair has risen 60% from its November 2022 low.
On-chain and market indicators relative to the 2019 rally are sending mixed signals as to whether the Bitcoin rally will continue or not. However, there are strong reasons to believe that the market has reached an important turning point where it could turn into a full-blown bull market or fall back into a long-term bear trend.
Let’s look at the top five indicators to understand the current price dynamics relative to the 2019 bull run.
Bitcoin overcomes historical trading levels
Bitcoin price is above the 200-day moving average (MA) at $19,600, which could encourage paper traders who want to open long positions. Historically, this metric has acted as a bull-bear pivot line, with breakouts above becoming bullish and vice versa.
BTC/USD usually retests the 200-day MA on the breakout, which raises the possibility of a correction to $19,500. However, this was not the case in 2019, when the price continued to rise without retreating to the 200-day MA.
At the same time, traders may be paying attention to the weekly moving average of 200 at $25,100. Bitcoin price has never fallen below the 200-weekly MA until November 2022 and recovering this level could encourage technical buyers to join the bandwagon.
However, until a breakout occurs, traders may remain on the sidelines. Funding rates for perpetual swap contracts are currently neutral, indicating that traders are awaiting confirmation.
Crypto trader Twitter, Abadi, finds the market only at the “halfway point” considering the duration of the current rally compared to 2019. The 2019 rally lasted 193 days from bottom to top, while only 92 days have passed since the bottom on November 9, 2023.
Abadi went on to say that if the 2019 timeline fractal holds true in 2023, BTC/USD could rise to $46,000 in March.
The stablecoin supply ratio oscillator is near its 2019 top
Bitcoin’s stablecoin supply oscillator (SSR) measures the market’s buying power. The indicator measures the ratio between Bitcoin market capitalization and stablecoin resources. A low reading on the SSR oscillator indicates a stablecoin’s higher purchasing power. Conversely, a spike in the metric indicates an overbought situation.
The February 2023 Bitcoin price surge saw the SSR oscillator surge to levels not seen since 2019 and 2021. The indicator suggests that the positive trend may be coming to an end. There is little chance of a final push higher towards the psychological level of $30,000.
However, the data can be taken with a grain of salt due to regulatory violations in the stablecoin BUSD, which caused a significant drop in supply. It may have skewed the SSR oscillator to indicate overbought conditions.
One of the biggest concerns of the current surge is the lack of whale buying. In contrast to 2019, when the number and ownership of BTC addresses with more than 1,000 BTC increased as the price rose from the bottom and whales sold in the current rally. The discrepancy between whale numbers and prices raises concerns about the sustainability of the positive trend.
The data highlights an important bull-bear pivotal point
Investors increase winning positions in pullbacks in uptrends and this is indicated when the Spent Output Profit Ratio (SOPR) Indicator remains above one. The opposite happens in downtrends where bears dominate the market by selling into rallies. A crossover of the metric above 1 is a potential trend reversal signal.
Glassnode’s 7-day moving average of the adjusted SOPR indicator suggests that the bear trend may be reversing. The indicator turned bullish when BTC broke above $20,800 in January 2023. The metric retested the pivotal support level with Bitcoin price at $21,800, creating an important support level for a sustained uptrend.
related: Bitcoin faces do-or-die every week, every month close to the macro bull trend at stake
In addition, the price has moved above the average buying level of both short-term and long-term holders, which is another signal of a potential trend reversal. This could be a sign that the market has reached an important turning point as the on-chain oscillator returns to equilibrium.
The metric also signals that a potential bull trend is in sight when the price remains above support at $21,800, $20,800 and $19,600.
The weekly close above $25,100 may encourage derivatives and technical traders to buy into the current rally, but there are some warning signs that the market may reach overheated conditions and a quick correction to lower support levels cannot be ruled out.
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