Bitcoin (BTC) and other riskier assets slipped on Oct. 21 as traders scrutinized macro indicators that suggest the Federal Reserve would continue to hike rates. Nonetheless, the BTC/USD pair remains rangebound inside the $18,000–$20,000 price range, showing a strong bias conflict in the market.
BTC price holding above $18K since June
Notably, BTC’s price has been unable to dive deeper below $18,000 since it first tested the support level in June 2022. As a result, some analysts believe that the cryptocurrency is bottoming out, given it has already corrected by over 70% from its record high of $69,000, established almost a year ago.
BTC/USD daily price chart. Source: TradingView
“During the 2018 bear market, BTC saw a max drawdown from peak to trough of 84%, lasting 364 days, while the 2014 cycle lasted longer, bottoming after 407 days,” noted Arcane Research in its weekly crypto market report, adding:
“Both bottoms were followed by unusually low volatility.”Bitcoin’s historical drawdowns. Source: Arcane Research
In addition, a flurry of widely-watched on-chain Bitcoin indicators also hints at a potential bullish reversal ahead. Let’s look at some of the most historically significant metrics.
Bitcoin MVRV-Z Score
The MVRV-Z Score assesses Bitcoin’s overbought and oversold statuses based on its market and fair value.
Historically, when Bitcoin’s market value crosses the fair value, it indicates a market top (the red zone). Conversely, it indicates a market bottom (the green zone) when the market value crosses below the fair value.
Bitcoin MVRV Z-Score. Source: Glassnode
The MVRV-Z Score has been in the green zone since late June, suggesting Bitcoin is bottoming out.
Bitcoin’s Reserve Risk assesses the confidence of the token’s long-term holders relative to its price at the point in time. Historically, a higher Reserve Risk (the red zone) has coincided with market tops, reflecting lower investment confidence at record-high Bitcoin prices.
Conversely, higher confidence and a lower Bitcoin price mean a lower Reserve Risk (the green zone), or better risk/reward for investing.
Bitcoin Reserve Risk vs. price…...