Independent market analyst Horn Harris found that the period between bottom-up and top-down has remained the same since 2015: 152 weeks and 52 weeks, respectively.
Even in 2013, the bear market lasted 58 weeks, just six weeks short of the other two cycles.
Bitcoin price chart with timelines for past sessions. Source: Twitter
Another similarity to the recent bottom formation is the similarity between Bitcoin’s current bullish trend and the trend in 2019, when the primary catalyst was the prevailing negative investor sentiment. Bitcoin price is up nearly 350% from the $3,125 low, and has not fallen below this level going forward, indicating a previous cycle bottom.
Four years later, conditions have changed, but the underlying reason for the recent 30% rally in the Bitcoin price was still the market expecting lower prices due to macroeconomic headwinds. Perhaps the lack of positive sentiment and the build-up of short positions in the futures market allowed buyers to make a move in disbelief to chase short-term liquidations and incite FOMO – the fear of missing out – among investors who were sitting on the sidelines.
But not all conditions are the same. Previously, BTC whales – addresses with more than 1,000 BTC – were on a buying spree as the price of Bitcoin started to drop. However, these buyers have not participated in the recent rally, which has raised concerns about its sustainability.
If history repeats itself, Bitcoin’s November 2022 lows of around $15,500 would signal the end of the current cycle. It could also mean that a new bullish cycle has begun, and the asset may record a new peak in October 2025.
Number of addresses with more than 1,000 BTC. Source: Glassnode
It will be interesting to see if whale buyers buy into the Fed’s theory under Jerome Powell that it is pulling off a successful plunge rather than a recession as a result of its flight against inflation. December economic data on consumer price inflation and employment figures showed early signs of an overall improvement. Some other on-chain indicators can help confirm whether this bullish trend is the real deal.
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Bullish reversal signals appear in the short term
Bitcoin has been trading around bargain buy levels for some time on the longer time frames. However, in the short term, the risk of price dropping to new lows was high due to mining selling pressure, macroeconomic headwinds, and fear of FTX contagion. The recent rally is showing signs of the series’ signals moving into bullish territory.
The Bitcoin Realized Price metric reflects the average price of buyers when the coins are moved on the chain. Its price has fallen below its actual price only three times in the past eight years. Moreover, a break above this level marks the end of the downtrend on all of them.
Currently, the realized price of bitcoin is $19,715. If the price stabilizes above this level, it will encourage buyers sitting on the sidelines to join the rally.
Bitcoin price verified on chain (yellow) and market price (black). Source: Glassnode
Another reliable on-chain indicator is the spend-output-profit ratio (SOPR). It measures the profitability of Bitcoin transactions based on the price of tokens when they are added and withdrawn from specific addresses.
The indicator is used to identify up and down trends. When the price is in an uptrend, investors add to their winning positions during pullbacks, which are indicated when the SOPR value remains above one. The opposite happens in a bear: Bears dominate the market by selling on rallies. Thus, the crossover of the scale above the axis at one of them is a strong trend reversal signal.
So far, the seven-day average trade is still losing, but the price is very close to flipping upwards. Based on the latest SOPR pivot test, a bullish reversal will occur after a successful weekly close above $21,200.
SOPR Modified Entry Score. Source: Glassnode
Another notable development occurred with bitcoin miners, who were one of the hottest sellers in 2022 as the market price fell below the cost of producing bitcoin, adding pressure on them. However, the miners’ days of capitulation are probably over.
The Hash Ribbon indicator, developed by on-chain analyst Charles Edwards, flashes a buy signal, signaling the end of a trend of dropping hash rates, with prices regaining above production costs for large to medium-sized organizations.
Unless the Bitcoin price drops below $20,000 in the near future, the market can expect miners to start accumulating Bitcoin rather than having to sell the entire amount to cover operating costs.
The striking similarities between previous Bitcoin cycles and the easing of the miner’s ongoing sell-off should help buyers build a long-term bullish support level.
However, the non-buying of whales and the price reversal off the SOPR pivot level around $21,200 raises some alarms.
