Bitcoin’s price had been dwindling since the month of November last year. The downtrend remained persistent for nearly a period of three months. Finally, on 24 January, Bitcoin created a local bottom at $32.9k, right after which, it began its higher highs phase. In effect, the kingcoin’s valuation has risen by close to 40% since then.
So, is Bitcoin’s macro bottom in already?
People from the space continue to have conflicting opinions with respect to the aforementioned question. However, analyzing the state of a couple of fundamental metrics would give us a clearer picture.
Let’s consider the supply held by short-term HODLers first. As can be observed from the snapshot attached below, this metric dunked down to one of its lowest points towards the end of last year. Now, however, it has already started rising, indicating the commencement of a buying spree.
A closer look into the chart would highlight that the supply held by these holders, more commonly referred to as ‘weak hands,’ do not remain locked-in for a long period. They end up booking profits within short spans of time.
Until now, two pairs of double bottoms have been formed on the short-term HODLer supply chart – one each in 2014-15 and 2019-20.
With the buying spree already going on, it looks like the trend would continue even this time. In such a scenario, the short-term Bitcoin HODLer supply would increase over the next couple of quarters before bottoming out again. This, in effect, would assist Bitcoin’s price climbing up the ladder.
A similar phenomenon has been observed in the past too. Bitcoin’s price set on uptrends on both occasions right after the first bottom on the short-term supply chart was created. The beginning of the respective rallies has been highlighted with green circles. And the pattern, this time too, looks quite similar.
So, looking at how the asset’s price has behaved in the past, it can be said that Bitcoin’s price has already bottomed out. Opining on the same, pseudonymous on-chain analyst ‘Root’ took Twitter to exclaim,
“Likely the macro bottom is in… Who could have known.“
However, to cross-confirm the same, we’ll look into the state of other fundamental metrics in another article later this week. Keep an eye out on this space.