According to an on-chain indicator with a proven track record, Bitcoin (BTC) may be nearing the end of its larger bull market trend.
The “rarely reached” multiplier of the number of days that have historically signaled past Bitcoin price peaks, known as Value Days Destroyed (VDD), has surpassed a significant threshold.
VDD multiple hits “rare” high
Bitcoin has yet to establish a new record high or regain its previous peak from 2021 as a solid foundation for future growth.
While some continue to believe that Bitcoin’s price will resume discovery, on-chain analysts are starting to express worry.
Among them is analyst TXMC, host of YouTube channel Alpha Beta Soup.
This week, TXMC disclosed new VDD data, indicating the chart displayed peaks similar to those preceding BTC/USD’s major tops for Bitcoin versus the US Dollar.
“The rare 4.0 print,” he wrote in accompanying commentary.
“Has on-chain momentum topped?”
The VDD Multiple examines how on-chain transactions stack up against historical benchmarks to identify instances where market sentiment might be driving a significant price surge, or bubble. The “value days destroyed” metric refers to the number of past inactive days during which coins were later spent on the blockchain.
In March, when the VDD multiple was at around 3.5, TXMC already described it as “overheated.”
“It isn’t perfect, but notable,” he wrote at the time.
Despite sharing similarities with the earlier part of 2021, this year brings a significant distinction. Specifically, when the volume of daily transactions (VDD) reached a peak in the past, Bitcoin’s value versus the US dollar had already surpassed its previous record high of $20,000 by doubling it.
“In 2024, we will continue to produce the same peak value as before,” TXMC stated, implying an uncertain situation since we’re still at the previous record high.
RSI preserves key support after flush
According to a recent report by CryptoMoon, certain indicators on the price charts are encouraging a more hopeful outlook among traders.
Some well-known indicators include the relative strength index (RSI), which has returned to levels not seen since late January.
According to information from CryptoMoon Markets Pro and TradingView, the Relative Strength Index (RSI) for Bitcoin’s daily price movements was at 53 on April 10th. This is significantly lower than the typical “overbought” threshold of 70, which usually appears during the most robust phases of Bitcoin’s price growth.
In a robust uptrend, Bitcoin’s daily RSI often signals a rebound when it touches the 50-mark. We’re seeing this occurrence happen currently.
Trading expert Alan Tardigrade emphasized once more the potential positivity indicated by the RSI charts on an hourly basis. There, he noticed a concealed bullish divergence where price trends seemed to contradict but ultimately followed the more optimistic RSI signals.
In simpler terms, this trader is pointing out to his audience that while Bitcoin’s price is forming new lows ($BTC makes a higher low), the Relative Strength Index (RSI) indicator is showing older, lower values (RSI is displaying a lower low). This could be an indication of an upcoming bullish trend continuation.
In simpler terms, analysts like Plan B are closely watching the monthly data point, which has consistently remained above 70. This observation is important as we approach the upcoming halving event for Bitcoin’s block rewards.
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2024-04-10 13:19