Bitcoin: Assesses whether a local bottom has been reached or not
- CryptoQuant analyst Wedson has opined that a local top has been reached.
- However, calculations on the chain paint a different picture.
CryptoQuant analyst Joao Wedson have suggested that Bitcoins [BTC] the price, which saw a decline of 6% in the last week, may have hit a local bottom at the $24,000 price mark.
Wedson concluded after considering the 350-day moving average and 100-day exponential moving average that make up BTC’s Taker Buy Sell Ratio indicator.
According to Wedson, with the Taker Buy Sell Ratio indicator, analysts have found that the 350-day MA and 100-day EMA can identify BTC’s price trend changes.
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He further noted that the 100-day EMA crossing a value line of one can also signal local tops and bottoms, presenting buying or selling opportunities.
In the current BTC cycle, the rally in BTC’s price since the year began pushed the 100-day EMA above one.
This, according to Wedson, may have initiated a bear cycle that could result in a downward trend in BTC’s price.
Source: CryptoQuant
Bottom price markers on the chain say otherwise
When it comes to identifying local price floors for cryptocurrency assets, some on-chain calculations have been effective in that regard. One of the most effective indicators is Age Consumed, which monitors the behavior of previously inactive coins on the blockchain.
An increase in age consumption indicates that a significant number of inactive tokens have been transferred to new addresses, indicating a sudden and pronounced change in the behavior of long-term holders.
Since long-term owners and experienced traders rarely make impulsive decisions, a renewed activity of dormant coins often coincides with significant changes in market conditions.
Read Bitcoins [BTC] Price prediction 2023-24
A look at BTC’s age consumed revealed a peak in the age consumed metric on February 22, when the king coin traded at $23,700. BTC’s price spent the next three days rallying to trade at $24,100, at press time.
The growth in BTC’s price, which followed the increase in Age Consumed, can be perceived as the leading coin bottoming out at the $23,700 price point, and further rallies should be expected.
Source: Sentiment
Another indicator that can be useful in this regard is BTC’s Network Profit/Loss ratio (NPL). This metric calculates the average profit or loss for all coins transferred to new addresses on a daily basis.
This approach is used to identify instances of profit-taking or holder capitulation on the blockchain.
Falls in the NPL calculation often indicate short periods of capitulation by “weak hands” and the return of “smart money” to the market. This is why these falls often occur at the same time as local setbacks and phases of price recovery.
This has been the case with BTC for the past few days. Data from Santiment revealed a significant drop in the royal coin’s NPL on February 22, which has since been followed by a rise in price.
Source: Sentiment
