Bitcoin is printing a key bear market bottom signal at $87,000 as analysis says that BTC price history may repeat.
Key points:
Bitcoin’s velocity RSI metric returns to levels seen only around bear market bottoms.
BTC price action could thus be performing a “major cyclical reset,” says analysis.
The crypto long/short ratio breaks a lifetime habit as Bitcoin tumbles.
Velocity RSI sees BTC price bottom in progress
In an X post on Tuesday, analyst On-Chain Mind flagged rare single-digit readings on Bitcoin’s velocity relative strength index (RSI) indicator.
Bitcoin bear market comparisons have come thick and fast in recent weeks, but now, a leading BTC price indicator demands a market bottom.
Velocity RSI, which takes into account recent price momentum changes, has now dived below 10/100 to hit some of its most “oversold” levels ever.
“The Velocity RSI on the 3-day chart has just hit its lowest reading since the bottoms of the last 3 bear markets,” On-Chain Mind said.
An accompanying chart showed similar chart setups at the end of Bitcoin’s 2018 bear market, as well as midway through 2022, around six months before the most recent true bear market found its long-term floor.
“It’s one of the more reliable, widely-tracked momentum exhaustion indicators, and it’s now flashing a level we only see at major cyclical resets,” On-Chain Mind added.
“An interesting technical signal worth paying attention to.”
Bitcoin long/short ratio enters unknown territory
Depending on the perspective, current BTC price behavior stands out from past bearish phases.
Not all classic price metrics have reacted the same to the latest events, and these now include Bitcoin’s long/short ratio.
Joao Wedson, founder and CEO of crypto analytics platform Alphractal, noticed an unusual phenomenon playing out this week.
“Over the years, we’ve identified several strong Alpha signals in the crypto market. One of the most reliable has always been this: when Bitcoin’s Long/Short Ratio rises above the average of major altcoins, it historically points to a price bottom forming. But this time something different happened,” he told X followers.
“For the first time ever, BTC kept this ratio at extremely elevated levels for an unusually long period — and yet we saw false bottom signals throughout November, while the price continued to drop.”
Wedson explained that the implications of this could hurt bulls. Traders being overly eager to long BTC while attempting to catch a falling knife may incentivize large-volume players to liquidate them by driving the price down further.
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