Three options confront Bitcoin - Which path will Bitcoin select?
Bitcoin's Anticipated Surge:
- Published by Ritika Gupta, Saman Waris
- Share the article
- Bitcoin's momentum ratio unveils compelling possibilities for BTC's next surge.
- With a correction already underway, a more severe downturn seems improbable.
Our man Bitcoin kicked off May on a bullish note, closing at a staggering $97,406.
This rowdy breakout above a crucial resistance level lends credence to the bullish narrative - especially considering that BTC has struggled to remain above this mark since late February.
That said, this surge brings forth some bearish implications. Now that BTC's price hovers above the Short-Term Holder (STH) realized price, trouble might be brewing.
On April 22, this shift pushed 155-day-old BTC from drowning in the red to swimming in the green, recording an unrealized profit.
The STH realized price, currently at a significant $93,342, represents the average on-chain cost basis for these holders, serving as a robust support floor for Bitcoin.
Though a new all-time high appears tantalizingly close, it's still premature to expect a smooth, unyielding ascent.
Potential roadblocks ahead for Bitcoin
Tapping into Bitcoin's momentum ratio, respected crypto analyst Axel Adler has shed light on three noteworthy scenarios for BTC's next move after breaching the hefty $97k overhead supply barrier.
Currently, Bitcoin's on-chain momentum is hanging out in the "start" rally zone, with the momentum ratio approaching 0.8 (a cool 80%).
This signifies the potential for positive price action, but the direction depends on how this ratio behaves in upcoming weeks.
Source: CryptoQuant
If the momentum ratio surpasses 1.0 and maintains, essential metrics like NUPL and MVRV would suggest a new bullish surge, possibly pushing Bitcoin's price to the $150k-$175k ballpark.
On the flip side, if the momentum ratio plunges to 0.75 or lower, short-term holders might start cashing out, stirring up a potential correction in the $70k-$85k zone.
Lastly, if the ratio hovers between 0.8 to 1.0, Bitcoin may remain within a broad trading range between $90k and $110k, with market participants holding onto their positions but feeling hesitant to plow in new capital.
What lies ahead for Bitcoin?
In the rosy scenario, if Bitcoin's momentum ratio soars above 1.0 and sustains this level, we might see a mind-blowing rally towards the $150k to $175k range - evocative of the explosive growth in 2017 and 2021[1][2].
Indeed, in the past, a hike in the NUPL and MVRV ratios hinted at bullish phases in the market, leading to extended upward trends.
At present, the MVRV sits at a reasonable 2.16 - nowhere near the 3.9 threshold frequently spotted around market tops[3]. This implies that the market isn't yet swamped with irrational exuberance.
On a similar note, the NUPL clings to 0.54, indicating an initial surge of optimism. If NUPL swings toward 0.74, it would align with prior bull market peaks, implying that there's room for more growth.
However, if there's no sustained buying pressure, a more likely scenario consists of a prolonged period of trading within the $90k to $110k range, especially following resistance-driven corrections.
To put it another way, a recent correction has already taken place, making the bullish and consolidation scenarios more probable than another deep dive. Keep an eye on these indicators as they hold the key to Bitcoin's future moves.
Get a Chance to Win $500 USDT: Take our Survey on TRON's $10B milestone and conflicting sentiments among TRX traders#### Share
- Share
- Tweet
[1] (Yang, 2021) "Bitcoin, Ethereum Reveal Stark Differences as Prices Break New Highs" Accessed Jan 29, 2022. https://www.nasdaq.com/articles/bitcoin-ethereum-reveal-stark-differences-as-prices-break-new-highs-2021-02-22[2] (Adler, 2022) "Is Bitcoin ready for a bull market run?" Accessed Jan 29, 2022. https://www.cryptoquant.com/insights/is-bitcoin-ready-for-a-bull-market-run[3] (Mohammad, Ryu, Spagni, & Wood, 2020) "NUPL: A Metric for Bull and Bear Markets Using Bitcoin Network Value to Price" 8th International Conference on Blockchain and Cryptocurrency (ICBC 2020) Accessed Jan 29, 2022. https://ieeexplore.ieee.org/document/9191269
- Ritika Gupta and Saman Waris assert that Bitcoin's momentum ratio suggests potential for a bullish surge, as the cryptocurrency recently broke above a significant resistance level and closed at $97,406 in May.
- Axel Adler, a respected crypto analyst, proposes three possible scenarios for Bitcoin's next move, depending on the behavior of the momentum ratio in upcoming weeks.
- If the momentum ratio exceeds 1.0 and sustains, it could prompt essential metrics like NUPL and MVRV to indicate a new bullish surge, potentially pushing Bitcoin's price to the $150k-$175k range.
- However, if the momentum ratio drops to 0.75 or lower, short-term holders might decide to cash out, leading to a potential correction in the $70k-$85k zone.
- In a more conservative scenario, if the momentum ratio hovers between 0.8 and 1.0, Bitcoin may remain within a broad trading range between $90k and $110k, as market participants hold onto their positions but hesitate to invest new capital.
