The Last Time This Bitcoin Indicator Turned Bullish It Saw a 65% Hike, Will It Happen Again?

Reynaldo Marquez

3 years ago

2 mins read

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Bitcoin was rejected as it approached the high area around its current levels. The first crypto by market cap could return to previous lows as it continues to trade in a tight range.

The start of the Bitcoin Miami Conference 2022 could provide the bulls with some support. The event is usually filled with positive announcements with a direct impact on BTC’s price.

However, the macro-factors preventing Bitcoin and other risk-on assets to reached new highs seem to be re-gaining relevance. The U.S. Federal Reserve (FED) began its tapering process within expectations but could turn more aggressive as inflation persist.

At the time of writing, Bitcoin trades at $43,900 with a 5% loss in the last 24-hours and 7-days.

In the short term, Bitcoin must hold above $44,000 in the daily to prevent further losses. Data from Material Indicators records little support for BTC’s price until around $42,000. Therefore, any short-term selling pressure could take BTC to revisit the low of its current levels.

In the long term, Senior Commodity Strategist for Bloomberg Intelligence Mike McGlone said the benchmark crypto flashed a buying signal in its BI trend signal. Used to measure momentum in the market, the analyst said this is the first time since late 2021 that BTC turns bullish.

As seen below, the signal has proceeded with major rallies over the past 7 years. McGlone added the following on the potential for BTC to reclaim higher levels:

In the past seven years there have been 30 signals, with a relatively high 66% of them notionally profitable. Though macro factors remain unfavorable, and the broader pattern is still a large range of $30,000-$70,000, the current rally may have legs similar to the signal of August 2021, which preceded a rally of 65%.

A Strong Dollar Could Play Against Bitcoin

The rally in the U.S. dollar seems to be fueling the current downside price action. Probably related to the conflict between Russia and Ukraine and rising inflation in the United States.

As seen below, the U.S. dollar has been on an uptrend for almost a year. In May 2021, the currency touched its yearly low near the 89 marked and has been signaling more appreciation as uncertainty in global markets increases and investors look to protect their wealth.

FTX Access believes the crypto market faces a short-term hurdle with the upcoming FED Federal Open Market Committee (FOMC) meeting. As mentioned, the financial institution could turn more hawkish increasing their interest rates from 25bps to 50bps.

FTX Access recommended traders to monitor the FED balance sheet. This could provide more clues into the institution’s approach to the inflation issue and the aggressiveness of their monetary policy. FTX Access said:

It’s possible that this meeting was too soon to get a QT plan agreed, but given how far they are falling behind inflation it seems quite likely that we do FOMC officials have guided us that the balance sheet unwind will be faster than last time (which started at $10b/month).

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

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