Bitcoin’s Bottom Fractal: A 130% Rally on the Horizon?
A Bitcoin (BTC) low signal that occurred in 2023 ahead of a 130% rally in 2024 has resurfaced this week, raising the possibility that the price is nearing another bullish turning point. However, the broader liquidity, exchange-traded fund (ETF) and macroeconomic data changes the environment compared to two years ago, suggesting that the path ahead may not be the same as the previous cycle.
The BTC Bottom Trigger: A False Signal?
Data aggregator Swissblock noted that Bitcoin has now logged 25 consecutive days in its “extremely high risk” zone, the longest stretch on record and above the 23-day peak in 2023. In the past, a prolonged stay in this zone has been accompanied by late-stage declines or a bottom signal.
MN Capital founder Michaël van de Poppe also pointed out BTC’s ratio to supply on the profit/loss chart, which shows how price interacts with levels that previously marked low periods. In 2023, the shift from high risk to low risk coincided with the start of a strong bullish expansion.
Traders’ positioning is not consistent with an uptrend. RugaResearch noted that 30-day apparent demand continues to fluctuate between positive and negative. While selling pressure has subsided, sustained buying demand has failed to maintain its dominance.
Major Bitcoin Declines Take Time
The macroeconomic newsletter Ecoinmetrics highlighted that a BTC decline of this magnitude rarely reverses quickly. Apart from the COVID rally in 2020, which was supported by aggressive monetary policy interventions, recoveries developed after 50% declines over a longer period.
ETF flow data reinforces the cautious tone. Since August, cumulative inflows into gold ETFs have exceeded spot Bitcoin ETF inflows on a 90-day rolling basis. During the same period, Bitcoin funds have seen negative inflows on the 90-day moving average, which currently stands at -$2.06 billion.
Inflation trends added further context. Ecoinometric research found that total personal consumption expenditure (PCE) is around 2.9% year-on-year, with core spending at around 3.0% and core services at over 3.4%. The Federal Reserve is targeting PCE and the recent trend has not shown a clear downward move. Without a weakening of expectations, liquidity expansion appears to be limited.
Price Levels Determine the Debate
Price levels determine the debate. Willy Woo, managing partner of CMCC Crest, said any short-term recovery rally to $70,000 to $80,000 will likely be accompanied by another round of selling pressure as “the broader regime is heavily bearish and both spot and futures liquidity is deteriorating.”
Woo said the $45,000 level is consistent with the previous bear market. Below this, $30,000 and $16,000 mark historical support associated with longer-term trend maintenance.
This article does not contain any investment advice or recommendations. Every investment and trading activity involves risks and readers should conduct their own research when making their decision. While we strive to provide accurate and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of the information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph will not be liable for any loss or damage arising from your reliance on this information.
For more information, visit Cointelegraph.
