After the panicky last four weeks, the crypto market seems to have found some solid ground. We list a few signals that make us - cautiously - optimistic.
There are a number of indicators that point to a reversal of the downtrend.
- The Heikin Ashi price charts on the weekly timeframe point to a reversal. This method of charting filters out most of the noise from the data and is well suited to spot trend reversals.
- Bitcoins daily RSI (Relative Strength Index) dipped below 25 two weeks ago. A rare low value that historically leads to hefty price rises more often than declines in the weeks and months that follow.
On-chain indicators and market analysis
Also on-chain we can spot signals that in the past have usually led to a price increase in the weeks and months after.
- The so-called open interest rate and funding rates of Bitcoin and (to a slightly lesser extent) Ether have been negative for a few weeks. A similar situation to October 2021, just before the rally to Bitcoin's all-time-high.
- The fear-and-greed index has returned to neutral territory for the first time since November 2021, after months of being at fear and extreme fear. This indicator measures sentiment among Bitcoin investors. Historically, price increases follow after the fear-and-greed index claws its way up out of a depression.
- The STH MVRV fell to a value of below 0.75 two weeks ago. Historically, this is followed by price increases in the medium term of three to twelve months. The STH MVRV stands for Short Term Holder Market Value to Realized Value. Low values mean that recent buyers - the more speculative market players - are at a loss. At that point, the price usually bends back upward.
There are several signs that Bitcoin and Ether have reached their lows. That does not mean that they will now rise like a rocket. And of course, unexpected bad news may pop up. But based purely on analysis of similar situations in history, we are cautiously optimistic about the coming weeks and months.