Key Points
- Bitcoin could be on the verge of a rally, according to recent data from CryptoQuant.
- Key on-chain metrics indicate a positive shift in market sentiment and a potential move towards a bullish phase.
New data from CryptoQuant suggests that Bitcoin might be preparing for a rally.
A CryptoQuant analyst known as Darkfost points out that key on-chain metrics are indicating a shift towards a bullish phase, signaling a positive shift in market sentiment.
Signs of a Potential Recovery
Darkfost highlights the 7-day Simple Moving Average (SMA) of the Fund Flow Ratio, currently at 0.05, as a primary indicator.
Historically, this level has signaled the end of bear markets or the beginning of new bullish phases.
A recent increase in the Fund Flow Ratio suggests increased investor activity on exchanges, typically a precursor to sharp price surges.
The 30-day SMA of the Estimated Leverage Ratio, a metric that monitors leverage use in Bitcoin trading, is another crucial metric indicating recovery.
Currently, the ratio is trending upward within a support range of 0.15 and 0.175, reflecting increased market participant confidence.
Increased leverage is further confirmed by rising interest in futures ETFs and Bitcoin options trading.
Long-Term Bitcoin Holder Activity
Darkfost also draws attention to the 30-day Exponential Moving Average (EMA) of Binary Coin Days Destroyed (CDD).
This indicator tracks the activity of long-term Bitcoin holders.
A sharp rise in this metric often signals the end of a bear market phase.
Currently, long-term holders appear to be positioning themselves for future gains, which could provide additional support for Bitcoin’s price in the coming months.
Historical cycle patterns, in addition to on-chain data, suggest Bitcoin may be on the brink of a breakout.
Analyst Rekt Capital notes that Bitcoin tends to break out from its reaccumulation phase around 154-161 days after a halving event.
If this pattern holds true, a breakout might be imminent, as 157 days have passed since the latest halving.
Despite historical trends not guaranteeing future price movements, Bitcoin behaved similarly in 2016 and 2020.
The usually bearish month of September this year surprised many with a 9% increase, marking the second-best September performance for Bitcoin since 2016.
The long-term outlook for Bitcoin remains positive.
Although it’s unclear when or how significant the next price jump will be, recent data suggests Bitcoin could be nearing a strong rally.
Bitcoin is currently just 14.6% below its previous peak of $73,738.
The next few days could play a crucial role in determining Bitcoin’s price trajectory.
In the upcoming months, the U.S. elections are expected to influence market sentiment, though the impact may be minimal.
Both candidates have expressed interest in crypto, with Trump being more vocal and demonstrating strong support.
