“Has the crypto market bottomed?” is the question that has been on the minds of Bitcoin traders over the past weeks; after March 12th’s capitulation event, traders have been divided over this question.
Despite the uncertainty, Willy Woo, a prominent on-chain crypto analyst, recently weighed in on this pressing debate, writing that two fundamental metrics are suggesting the bottom has been established.
Related Reading: Crypto Tidbits: Bitcoin At $7,000, FATF Regulation, Coinbase Backs Ethereum DeFi
Key Bitcoin Mining Indicator Suggests Crypto Market Bottom Is In
Utilizing two indicators, the analyst explained that the way in which Bitcoin’s mining ecosystem is developing is indicating this market bottomed in March.
- Firstly, the Hash Ribbons — moving averages of the hash rate — have started to recover, which is a “reliable bottom signal.” The last time the Hash Ribbons looked similar to as they do now was in December 2019, at the $6,400 bottom, and in December 2018, the $3,150 bottom.
- And secondly, the Miners Energy Ratio, “the ratio between Bitcoin’s market cap to its energy consumption is in the buy zone” after briefly breaking into the “extreme buy zone” during March’s crash. The last time this ratio entered the extreme buy zone was months before the previous halving, prior to the 4,000% rally to $20,000.
A tale of 2 miner charts. #Bullish
Hash Ribbons recovering (assumes no lower low), a reliable bottom signal, probably some miner capitulation during the crash. They last got culled in Dec 2018, only the strong remain, I don't expect miners to add more sell pressure from here. pic.twitter.com/t0GEqKCKjv
— Willy Woo (@woonomic) April 5, 2020
Other Factors Are Flipping Bullish Too
There are other factors suggesting the worse has passed for the crypto market.
According to screenshots of crypto-enabled retail brokerages based in the U.K. shared by trader Nik Patel, a majority of users of these platforms are leaning long on Bitcoin. In fact, for IG.com is signaling that 78% of client accounts are long on the cryptocurrency.
Furthermore, Coinbase Pro’s order book shows that there are more traders bidding the foremost crypto than selling it, with there existing nearly 24,000 BTC worth of orders down to an order price of $2,000 and a mere 4,000 BTC worth of orders up to $12,000.
The fact that there is such booming demand for Bitcoin suggests it will be hard for sellers to push the cryptocurrency back to the $3,800 lows.
Bloomberg suggests that technical indicators support the idea that upside is favored. Per previous reports from NewsBTC, the GTI Vera Convergence Divergence Indicator recently “flashed its first buy signal in over three months” for the Bloomberg Galaxy Crypto Index — comprised of Bitcoin, Ethereum, Litecoin, Bitcoin Cash, XRP, and EOS.
Furthermore, the outlet on April 3rd wrote that Bitcoin has pushed above a key level of technical resistance, resulting in a technical gauge registering a “positive divergence and buy signal.” This indicator last did so in January 2020, prior to the 50% rally that brought BTC to $10,500.
Featured Image from Shutterstock