Glassnodes’ 30-day simple moving average (SMA). Bitcoin The real profit-loss ratio (RPLR) indicator is about to go above one for the first time since last April. would mean that Bitcoin The market will soon be feeling a greater proportion of profits (denominated in USD) than losses. According to Glassnode, “this generally indicates that sellers with unrealized losses have been eliminated, and a healthy flow of demand exists to absorb profit-taking”.
Historically, a long run below zero coincides with a break back above one (due to a bearish market) at the 30-day SMA of the actual profit/loss ratio. Bitcoin market floor. When RPLR was 0.23 in 2015 (and Bitcoin price was just under $200), then bitcoin posted a nearly 90x rally within the next three years.
Similarly, when the RPLR was below around 0.2 in 2019 and the price of bitcoin fell to around $3,600, the cryptocurrency went on to rally around 19x until it hit a record high in less than three years in late 2021. Has reached The RPLR recently hit a low of around 0.18, the lowest it has been since 2011, when bitcoin was trading at $16,000.
Bulls will be hoping for history to rhyme once again, and the world’s largest cryptocurrency by market cap could post another exponential rally over the next three or so years. A 10x rally from recent lows would see bitcoin reach around $160,000.
Alternative Bitcoin Market Cycle Indicator Also Flashes Green
RPLR is sending a clear signal that bitcoin may be in the early stages of a new bull run. Alternative bitcoin market cycle indicators are sending a similar message. According to the stock-to-flow valuation model of bitcoin, there could be a big rally in the coming year.
As can be seen in the chart above courtesy of bitcoin, the price of bitcoin follows a predictable market cycle between each so-called “halving” (when the mining reward is cut in half). Immediately after the halving, there is usually an exponential increase in the price of bitcoin, followed by a bear market that usually leads to the next bitcoin halving halfway through. This cycle has been followed fairly well so far during the current cycle.
Similar chart analysis posted by the pseudonymous crypto-focused Twitter account @CryptoHornHairs showed that bitcoin is following an almost exactly four-year market cycle, where every 364-day bear market is followed by a 1064-day bear market. Prices rally. According to analysis by @CryptoHornHair, the price of bitcoin has roughly followed this cycle for the past eight years.
Other Indicators Point to a Bitcoin Bottom
Above $22,000, bitcoin is trading up nearly 37.5% this month, its best monthly gain since October 2021. The rally has generated a lot of excitement and heated debate over what could potentially end the 2022 bear market.
Indeed, the broader macro picture is looking more favorable than it is for 2023 – the bulk of the Fed’s rate hike has already happened with US inflation falling sharply to the central bank’s 2.0% target and US growth slowing significantly. . Indeed, macro traders are increasingly betting on a more favorable interest rate backdrop in late 2023/2024.
In other words, the main driver of the 2022 bear market (a more hawkish Fed than expected) looks like it’s not going to be a problem in 2023. At the same time, several other technical and on-chain indicators are also pointing to a bitcoin bottom that may have been printed.
First, bitcoin recently climbed above its 200-day SMA and above its realized value. Both are viewed as highly important levels, with a sustained break north or south of either often seen as a sign of a change in bitcoin’s price momentum. Glassnode’s New Addresses Momentum and RHODL Multiple indicators are also trending higher. Elsewhere, Alternative.me’s Bitcoin Fear and Greed Index has recently improved to neutral (above 50). If it can now hold above 50 on a sustained basis, that has historically characterized the end of a bear market.
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