Traders are using various strategies to determine whether Bitcoin price has bottomed, but on-chain activity and derivatives data hint that the situation remains precarious.
Has Bitcoin price bottomed yet? According to @noshitcoins, derivatives and on-chain data signal that further downside could be in store.
Traders have been trying to time the much-anticipated trend reversal ever since Bitcoin (BTC) initiated its 48% correction to $30,000 on May 12. The move culminated with $12 billion worth of futures long positions being liquidated, and to date, trader’s confidence remains somewhat dampened.
The community started looking everywhere for trend reversal signs, including technical patterns, United States CPI inflation data and Bitcoin exchange deposits. For example, some analysts stated that a higher high, followed by a move above $40,000, would be enough.
We need to make a new Higher High to confirm a local bottom.
— Inmortal (@inmortalcrypto) May 24, 2021
However, two days later, Bitcoin managed to break the $40,000, although the move didn’t last for more than six hours. Meanwhile, other traders inferred that a retest of the $30,000 bottom is needed before a bounce.
#Bitcoin $BTC #BTC is forming a Descending Broadening wedge here. It’s bullish but there are two possible scenarios.
Green: breaking the resistance and maintain the uptrend.
Red: retest the bottom of the wedge (~30k) and bounce from there. pic.twitter.com/8L26kQvf7X
— Johnny Woo | Never DM you for Money (@j0hnnyw00) May 25, 2021
Although there could be empirical evidence or even logic backing those statements, market prices don’t always react to external news or previous chart formations. Unlike stocks, Bitcoin investors can’t rely on commonly used valuation multiples or even comparables.
Sure, a digital store of value is one use case, but at the same time, it is uncensorable and easily transferable….