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Historical On-chain Data Hints at Bitcoin Bottom! What’s Next For BTC price?

2 Nov, 20224 min readBitcoin
Historical On-chain Data Hints at Bitcoin Bottom! What’s Next For BTC price?

The crypto winter seems to be fading after long tears and tantrums that began in May as the market made a significant bullish season in October. Bitcoin went on to touch its monthly highs as it broke the fundamental resistance level at $20K.

BTC is trying to regain its old glory by showing positive signs of recovery as the digital asset added nearly $30 billion to its market cap and increased its value by 8% in ‘Uptober’.

However, the upcoming Federal Reserve FOMC meeting scheduled for tomorrow may bring some bearish woes for Bitcoin as it may again form a bottom in the price chart.

A Similarity In Bitcoin’s Pattern!

Several prominent crypto analysts around the world have given their speculations about Bitcoin’s future price movements following its historical pattern.

Recently, on-chain data provider and analyst firm, Glassnode has published their weekly on-chain data of Bitcoin, hinting at an extended bearish trend for Bitcoin.

According to Glassnode’s weekly report, specific metrics indicate the in-depth comparison of BTC’s current bottom movement with its previous cycles.

To confirm this bearish analysis, two indicators were utilized: Realized Price and Mayer Multiple, while the former calculates the average acquisition per coin and the latter measures the ratio of the coin’s current price to its 200-day SMA (simple moving average).

The Realized price helps in identifying the unrealized loss of the total market if the spot price trades below the calculated Realized Price, which indicates an overall bearish trend of the specific coin.

The Mayer Multiple presents two market conditions: overbought and oversold. The analyst noted that Bitcoin maintained a Mayer Multiple value below 0.6 in its previous cycle lows.

Glassnode stated, “Remarkably, this pattern has repeated in the current bear market, with the June lows trading below both models for 35 days. The market is currently approaching the underside of the Realized Price at $21,111, where a break above would be a notable sign of strength.”

Looking at 2018’s Bitcoin bear market, it makes similar price trends and patterns in 2022. Bitcoin’s 200-week exponential moving average (200-week EMA) plays a similar game in 2018 and 2022 as BTC initiated a long-consolidated movement after its price traded below the 200week EMA.

Bitcoin’s Current Bearish Trend To Last Longer

To determine the upcoming potential consolidated range of Bitcoin’s bearish market trend, Glassnode conducted another metric which is the Balanced Price, representing the difference between the transferred price and realized price.

According to analysis, BTC may trade in a range between Realized Price’s upper limit at $21.1K and Balanced Price’s lower limit at $16.5k.

Glassnode noted that BTC previously kept its price below 0.6 for 5.5 to 10 months while in a bearish trend.

The current downtrend is only three months old, while in the 2014 and 2015 bear markets, BTC stayed in a range-bound bearish zone for ten months, and in the 2018/2019 bear market, the bearish range lasted for 5.5 months.

Therefore, it is anticipated that the current downtrend will extend further and trade in this range a bit longer before making any bullish reversal.

The UTXO Realized Price Distribution (URPD) represents the total distribution supply of a specific acquisition price. Glassnode analyzed that BTC price registered a UTXO of 22.7% of the total supply when the price made a low below the Realized Price upper limit in 2018-2019.

Comparing this data with the current price movement, BTC is poised to drop more as the UTXO is just 14%. The analysis suggests that “further redistribution is needed”, which will push Bitcoin to new lows in the upcoming months.

Glassnode said, “It does not appear that the bear-to-bull transition has formed as yet, however, there does appear to be seeds planted in the ground.”


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