These 5 Indicators Determine The End Of The Bitcoin Drop!

The fast-profit days of bitcoin, memecoins and altcoins have come to an end with the emergence of the dreaded bear market. The bear market has received full approval from the top cryptocurrency. BTC fell below the all-time high price of its previous cycle. Thus, it triggered a sales wave in the wider market. The bear market has given both newcomers and seasoned traders goosebumps. The global crypto market is still under $1 trillion. However, the larger market is wondering how Bitcoin and altcoins will bounce back from this epic decline.

When will the Bitcoin bear market end?

It is almost impossible to predict exactly when the bear market will end. However, looking at previous cycles and price dips will help to understand how supply-demand dynamics unfold towards the end of bearish phases. Therefore, looking at metrics and indicators will give you an idea of ​​when the downtrend will end. Now let’s take a look at 5 indicators that enable analysts to predict the future of the market.

Fear and greed index

One of the simplest ways to see when a bear market is indeed over is to look at the broader market sentiment. The crypto fear and greed index provides an insight into the larger market mood. crypto market behavior is also highly emotional like other markets. Investors tend to be greedy when the market goes up. This causes FOMO (Fear of Losing). On the other hand, when people see red numbers or losses in cryptocurrencies, they react irrationally. An example of this is selling assets at a low price.

The Fear and Greed Index works on two assumptions: extreme fear would be a sign that investors are very worried. So when investors become too greedy, the market needs to make a correction. The index is one meter between 0 and 100. Zero means ‘Extreme Fear’ and 100 means ‘Extreme Greed’. As seen below, the fear and greed index is currently signaling Extreme Fear. cryptocoin.com As we reported, the current sentiment of the Bitcoin market has been heavily bearish.

Bitcoin SOPR

The Output Profit Ratio, or SOPR, is an indicator that gives an idea of ​​macro market sentiment, profitability, and losses taken at a given time. It reflects the degree of profit realized for all cryptocurrencies carried on-chain. In SOPR measurement, coins moving on the considered time scale are taken into account. In addition, the ratio between the nominal value when UTXO is created and the nominal value when UTXO is spent is used. Specifically, SOPR values ​​greater than 1 mean that cryptos carried that day were sold with profit, on average. Conversely, values ​​less than 1 indicate that these assets are trading at a loss.

While A-SOPR’s multi-year all-time low may indicate that the market has bottomed out, it cannot be said with certainty whether the current short-term recovery is just a bull trap. Glassnode said that Bitcoin Entity-Adjusted SOPR hit an all-time low (0.79772) on June 21. This low level was last revealed in March 2020. A-SOPR’s multi-year all-time low indicates market bottoming out. However, it does not give any idea whether the current short-term recovery is a bull trap.

200-week SMA

Historically, the 200-week simple moving average (SMA) has indicated multiple times that a bearish period has come to an end. In Bitcoin cycles, a trend reversal is taking place when the price breaks below and rises above the 200-week SMA. When this happens, there is a noticeable price increase over the total purchase price of Bitcoin. Thus, it is also used as a supporting indicator to indicate a market trend reversal.

Bitcoin RSI indicator

Apart from that, the relative strength index, or RSI, gives an idea of ​​when bear market lows may occur. RSI helps evaluate selling pressure versus buying pressure. The indicator also presents the greater sentiment of the market. Thus, it reveals whether the bulls or the bears dominate. In the previous bear markets, BTC’s RSI indicator fell into the oversold territory. It fell below 16 points in the time frame when BTC hit a low. To detect RSI reversals, it is necessary to look at longer time frames. Thus, the indicator can be used as a reliable measure of market returns. Usually, a U-turn in the weekly RSI is a further confirmatory indicator of the end of the bear market.

Market value-realized value (MVRM)

Market value-realized value is the ratio between an asset’s market value and its actual value. Analysts compare these two metrics. Thus, MVRV helps determine when price is above or below “fair value”. Excessive deviations between market value and realized value reflect excessive periods in the investor’s unrealized profit and loss, respectively. Therefore, it can be used to identify market tops and bottoms.

Low MVRV values ​​indicate that the market value of the altcoin supply is decreasing relative to the realized value (on a cost basis). Lower values ​​indicate undervaluation or weak demand dynamics in the system. Thus, it indicates a smaller degree of unrealized profit. A reversal in long-term MVRV is seen as a strong sign of market recovery. This can help chart a market bottom.

Moving average multiplier

The two-year moving average multiplier tracks the 2-year moving average and the 2-year moving average (MA) multiplied by the Bitcoin price by 5 times. This metric has also been used to determine when the bear market will end. Specifically, every time the BTC price drops below the 2-year MA, the market enters bear market territory. However, when the price rises above the indicator again, the uptrend is continuing. Also, when the price breaks above the 2-year MA x5 line, the same indicates a full-blown bull market. Thus, it provides an opportunity to take profit. Analysts often use this metric to indicate when it might be a good time to save.

Conclusion

These metrics and indicators help analysts assess whether the bear market is over. However, no indicator or metric can accurately indicate market bottoms, and it’s best to do your own research and stay safe in a bear market.

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