Is The Bitcoin Bottom In?

As prices retrace, on-chain data points to strength and the possibility of the world's most valuable coin printing out a bottom.

Bitcoin price shows signs of strength despite weakness, with on-chain data suggesting the possibility of a bottom.

Key Takeaways

Bitcoin price is trading above a crucial technical support level, indicating strength.

On-chain data, such as the Mayer Multiple and Futures Sentiment Index, points to bullishness.

Analysis shows that if sentiment worsens, a bottom could be signaled by a Multiple reading of 0.7.

After a period of weakness, Bitcoin price seems to be recovering, trading above a key support level. On-chain data, such as the Mayer Multiple and Futures Sentiment Index, suggests bullishness.

One analysis, using on-chain data from CryptoQuant, observes a decreasing Multiple reading. The Mayer Multiple is a tool used for gauging market sentiment, and a lower reading indicates undervaluation.

Specifically, the analysis notes that the Multiple reading has decreased from 1.82 to 0.9. While this signals a decrease in sentiment, the analysis suggests that the reading should decrease further.

According to the trader, if sentiment worsens, driving the Multiple reading down to 0.7, it could indicate a market bottom. Based on price action, this bottom ranges between $46,000 and $50,000.

However, it’s important to note that the Mayer Multiple, although useful, is a lagging indicator. It is calculated by dividing the spot BTC price by the 200-day moving average. A reading below 1 typically indicates possible undervaluation.

Technically, the analysis observes that the Bitcoin uptrend remains intact on the daily chart. Even though the coin is trending below $60,000, prices are still within the September 13 bull bar.

From an effort-versus-result perspective, this is a net positive for buyers, especially considering that the drop is occurring with lighter trading volume.

If BTC can hold above the $56,500 level, buyers will continue to have an opportunity. Better opportunities will arise if Bitcoin pushes higher, closing above last week’s highs of around $61,000.

Besides the Mayer Multiple and hopes of a price bottom, the analysis is also bullish on the coin’s strength, expecting it to find support. Hints of this strength can be found in the Bitcoin futures market.