Key points:
Bitcoin’s entity-adjusted dormancy flow has fallen below 250,000, marking a historical buying opportunity.
The short-term holder NUPL has turned negative, indicating seller fatigue.
Chart patterns, including a V-shaped and double-bottom formation, suggest a potential price rise to $118,000-$124,500 in the near future.
Bitcoin (BTC) is currently trading 5% above its recent low of $108,650, with three indicators implying that this may represent the local bottom for BTC.
Entity-adjusted dormancy signals BTC bottom
The entity-adjusted dormancy flow, which measures the ratio of Bitcoin’s market cap to its annualized dormancy value (in USD), is a useful metric for identifying potential market bottoms.
Related: Bitcoin bulls are back: What’s needed for a rally to $120K
Historically, when this indicator drops below 250,000 (as marked by red circles), it indicates a “good historical buy zone,” and has often preceded significant price recoveries or the conclusion of price corrections. Recently, the indicator fell to a low of 133,300.
Historically, breakouts above 250,000 following a dip have coincided with the onset of notable bull runs, as seen in July 2021 when Bitcoin bottomed and subsequently reached an all-time high of $69,000 on Nov. 10.
Now, with the indicator signaling a bullish trend once more, there is potential for prices to rise from the current level of around $114,000 to challenge previous highs in the near term.
As previously reported by Cointelegraph, Bitcoin’s spent output profit ratio (SOPR) has also decreased to 1.5, a zone historically associated with local bottoms.
Bitcoin’s short-term holder net unrealized profit/loss turns negative
The Net Unrealized Profit/Loss (NUPL) for Bitcoin short-term holders has flipped to negative, signaling stress among recent investors holding BTC for less than 155 days.
“Historically, STH capitulation events indicate a market reset, often laying a foundation for renewed accumulation,” Glassnode stated in a recent X post.
“This capitulation zone has frequently aligned with local bottoms,” crypto influencer Jack noted in an X post, adding:
“The setup suggests early accumulation.”
Negative short-term holder NUPL has typically coincided with price bottoms in bear markets or corrections, reflecting widespread exhaustion among sellers.
Once the selling pressure eases, demand from long-term holders or new buyers can stabilize and elevate prices.
For instance, negative NUPL readings were observed near April’s local bottom under $75,000, before the BTC/USD pair surged 65% to its $124,500 all-time high.
Additional charts indicate $108,000 BTC price bottom
Since Sept. 18, Bitcoin’s price action has formed a V-shaped pattern on the 12-hour chart, following an initial decline of 7.8% to a low of $108,700 on Thursday.
This dip prompted buyer accumulation, resulting in a sharp recovery to current levels. The relative strength index (RSI) increased to 53 from the oversold level of 27, indicating growing upward momentum.
As the price seeks to finalize the V-shaped pattern, it could rise towards the neckline around the $118,000 resistance level, equating to a 4% increase from current prices.
In a broader perspective, a double-bottom formation on the daily chart suggests a return to all-time highs at $124,500, provided the resistance at $118,000 is breached. This would yield total gains of 10% from current prices.
Matthew Hyland, a crypto analyst, remarked that Bitcoin’s market structure is “just clean,” pointing out the double bottom in the daily timeframe and the potential breakout from an inverse head-and-shoulders pattern.
“Entering Q4 post halving where BTC has historically found cycle highs”
As reported by Cointelegraph, BTC price could target the $140,000 range next if resistance around $112,000 to $114,000 is overcome.
This article does not provide investment advice or recommendations. Every investment and trading decision comes with risks, and readers are encouraged to conduct their own research before making any decisions.
