With the price of Bitcoin stuck below the $70,000 mark, analysts are beginning to flag this current performance as an indication of a bear market. After several weeks of downward pressure, many key metrics are beginning to flash signs of a continued correction phase, reinforcing the idea of a bear market scenario.
Key Bitcoin Metric Drifts Toward Its 4-Year SMA
Given the recent signals from multiple Bitcoin key market metrics, the ongoing BTC downward action does not seem to have come to an end yet. Currently, a particular metric indicates that the flagship asset is nearing a historically significant threshold, akin to a bear market phase.
This signal is emerging from the Bitcoin Daily Price Analysis with SMA Multiplier, built around moving averages and multiples, as reported by Darkfost, a data analyst and author at CryptoQuant. Recent data shows that Bitcoin has shifted back into the green zone on the chart and is approaching its 4-year SMA, which is currently positioned around the $57,500 price level.
The higher the standard deviation, and, consequently, the multiple of the SMA, the more overbought Bitcoin seems. However, the expert highlighted that the closer the price gets to the 4-year SMA, the more undervalued the price of BTC becomes. To make these stages easier to comprehend, a color scale is used to illustrate all of this.
In the past, this level has typically served as a reliable signal for the final stage of each bear market, with the flagship asset trading around these levels for several months. According to data on the chart, the market is nearing a bear market level, and Darkfost finds this current trend an interesting one that demands the market’s attention.
With Bitcoin edging closer to this level, focus is shifting to whether history will repeat itself or if a new cycle dynamic will kick in. For now, the cryptocurrency remains at a decision point that illustrates the mounting tension between persistent weakness and long-term valuation support.
Has BTC’s Price Reached A Bottom Yet?
As discussions about Bitcoin’s price bottom mount, Joao Wedson has provided insights into the situation using the BTC Long-Term Holder Realized Price Bands. Historically, the major bottoms have occurred when the price hits the -0.2 standard deviation levels of this key metric.
Wedson noted that this point is marked by classic capitulation phases and the final opportunity to buy the crypto king before a new bull market takes off. However, during the weekend, the behavior was different. A view into the chart shows that the price is unable to maintain moves above the +1 standard deviation, which suggests continued and aggressive sell activity from bears in these regions.
Currently, these bands are acting as natural support and resistance zones throughout market cycles. The likelihood of a structural bottom emerging rises sharply when the price gets closer to extremely negative values. Meanwhile, data is revealing the areas with the highest risk and the emergence of asymmetry.
Featured image from Pixabay, chart from Tradingview.com
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