Bitcoin’s upside prospects are supported by at least three on-chain and technical metrics. According to analysts, Bitcoin is in the process of bottoming out after gaining 25% based on market signals.
These 3 metrics show Bitcoin price forming potential ‘macro bottom’
The BTC price gained around 25% after dropping to around $17,500 on June 18. The upside retracement came after a 75% correction from the November 2021 high of $69,000.
However, the market started to recover again. Rate hikes and inflation are giving signals that reinforce the bearish outlook as crypto-focused companies go bankrupt. However, some widely watched indicators paint a different scenario. NUPL, Multiple, and RSI show that Bitcoin’s downside expectations from current price levels are minimal.
What does historical RSI data say for BTC?
The first sign of Bitcoin’s macro bottom comes from the weekly relative strength index (RSI). Notably, BTC’s weekly RSI has been “oversold” after dipping below 30 for the week of June 13. Meanwhile, the RSI slipped into the oversold territory for the first time since December 2018. Interestingly, Bitcoin ended its bear market rally that same month. It then rallied over 340% in six months, reaching $14,000. In another example, Bitcoin’s weekly RSI dropped to 30 (if not below) in the week starting March 9.
As we have included in the analysis of Kriptokoin.com, the BTC price has been similarly rising since June 18. At this point, it opened the door to potentially repeat the parabolic rally history after an RSI signal in the “oversold” zone.
Bitcoin NUPL rises above zero
Another sign of a potential macro low comes from the net unrealized profit and loss (NUPL) indicator. NUPL is the difference between the market value and the realized cap divided by the market value. It is represented as a ratio. A reading above zero here means investors are in profit. The higher the number, the more investors profit.
On July 21, Bitcoin NUPL broke above zero when the price swayed around $22,000. Historically, such a turn has followed major BTC price rallies. The chart below shows the same thing.
Mining profitability
The 3rd signal pointing to the Makto-bottom comes from another on-chain indicator called the Puell Multiple. Puell Multiple examines mining profitability and its impact on market prices. The indicator does this by measuring the moving average of daily token issuance (in dollars) and 365 days of token issuance (in dollars).
A strong Puell Multiple reading shows that mining profitability is high compared to the annual average, suggesting that miners will liquidate their Bitcoin treasures to maximize revenue. As a result, a higher Puell Multiple is known to overlap with macro tops.
Conversely, a lower Puell Multiple reading means miners’ current profitability is below the annual average. Therefore, miners are at risk of being shut down. Thus, the challenge is left to more competitive miners. The removal of weaker miners from the Bitcoin network has historically reduced selling pressure. Interestingly, the Puell Multiple reading as of July 25 is in the green box and similar to the levels observed in the March 2020 crash, 2018 and 2015 price dips.
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