- CryptoQuant analyst Wedson says a local spike has been reached.
- However, on-chain metrics paint a different picture.
CryptoQuant Analyst Joao Wedson has suggested that bitcoin [BTC] The price, which is down 6% over the past week, may have made a local bottom at the $24,000 price level.
Wedson came to the conclusion after evaluating the 350-day moving average and the 100-day exponential moving average that make up BTC’s Taker Buy Sell Ratio indicator.
According to Wedson, analysts using the Taker Buy Sell Ratio indicator found that the 350-day MA and 100-day EMA can identify BTC price trend changes.
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He further noted that the 100-day EMA crossing a value line of 1 could also signal local highs and lows and present buying or selling opportunities.
In the current BTC cycle, the year-to-date rally in BTC price has propelled the 100-day EMA above one.
According to Wedson, this may have started a bear cycle that could lead to a downtrend in BTC price.
Source: CryptoQuant
The bottoms in on-chain prices say otherwise
In terms of identifying local price bottoms for cryptocurrency assets, some on-chain metrics have been effective in this regard. One of the most effective indicators is Age Consumed, which monitors the behavior of previously inactive coins on the blockchain.
An increase in consumed ages indicates that a significant number of inactive tokens have been transferred to new addresses, indicating a sudden and pronounced change in the behavior of long-term holders.
Since long-time holders and experienced traders rarely make impulsive decisions, renewed dormant coin activity often corresponds to significant changes in market conditions.
Read Bitcoins [BTC] Price prediction 2023-24
A look at the consumed age of BTC showed a spike in the consumed age metric on Feb. 22, when the king coin was trading at $23,700. The price of BTC spent the next three days recovering to trade at $24,100 at press time.
The surge in BTC price that followed Age Consumed surge could mean that the leading coin bottomed at the $23,700 price point and more rallies should be expected.
Source: Santiment
Another indicator that might be useful in this regard is BTC’s Network Profit/Loss Ratio (NPL). This metric calculates the average profit or loss of all coins transferred to new addresses on a daily basis.
This approach is used to identify instances of profit-taking or holder capitulation on the blockchain.
Dips in the NPL metric often indicate brief periods of “weak-hands” capitulation and the return of “smart money” to the market. Because of this, these dips often coincide with local rallies and periods of price recovery.
This has been the case with BTC for the past few days. Data from Santiment showed a significant drop in the king coin’s NPL on Feb. 22, which has since been followed by an increase in the price.
Source: Santiment
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