Is Bitcoin Near a Bottom? Three Indicators Offer Hope, but What’s Missing for a Rally?
Bitcoin exchange reserves, recovering demand, and high whale balances support the possibility of a bottom forming, but according to xWIN’s analysis, buying needs to strengthen for a sustained rally.
An assessment published on CryptoQuant indicates that conditions for a bottom in Bitcoin have improved following the declines in October. However, the analysis does not turn signs of recovery into expectations of an uninterrupted rally: high U.S. Treasury yields, expensive oil, slowing ETF inflows, and profit-taking could continue to weigh on the price.
Three indicators support the possibility of a Bitcoin bottom
The first indicator is Bitcoin reserves on exchanges. Although a slight increase has been seen recently, reserves remain at low levels. The accompanying chart shows reserves of approximately 2.67 million BTC.
The second indicator is the 30-day change in apparent demand. Although this measure has recovered sharply from deeply negative levels, it has yet to rise above zero. Continued improvement in demand is important for strengthening expectations of a bottom.
The third indicator is whales’ total Bitcoin balance. Balances, which rose to approximately 3 million BTC, remained high even during the price correction. The analysis considers the amount held by large investors remaining at these levels to be among the factors supporting cautious optimism.
What conditions are needed for a sustained rally?
In xWIN’s assessment, continued ETF inflows, stronger spot buying in the U.S., and ongoing demand recovery stand out as confirmation that a bottom is forming. For that reason, positive on-chain signals are expected to be accompanied by actual buying demand in the market.
On the macroeconomic front, the analysis says that, as of October 12, markets were pricing in an approximately 18 percent probability of the Fed raising interest rates in October. Brent crude’s decline from approximately $110 to $103 is also among the developments considered.
With the November 3 midterm elections approaching in the U.S., the analysis notes that reduced political uncertainty after the election could help investors reassess their portfolio preferences. The analysis’ central expectation is that a potential pullback could create the conditions for a more sustained rally to follow.