3 Indicators Suggesting a BTC Market Bottom for Bitcoin

Bitcoin (BTC) might establish a local bottom following a decline of over 35% from its peak of approximately $126,200 recorded two months ago, according to a blend of technical and on-chain metrics.

Key Insights:

• Momentum, miner capitulation, and liquidity signals indicate diminishing selling pressure.

• Macroeconomic liquidity suggests a potential BTC recovery could commence within the next 4–6 weeks.

Bitcoin Sellers Approaching Exhaustion

As of December, Bitcoin’s weekly Stochastic RSI has risen from oversold conditions, a setup that has often appeared near significant inflection points before price rebounds, as noted by trader Jesse in the accompanying chart.

Similar bullish crossovers were observed in early 2019 (after BTC bottomed around $3,200), March 2020 (the COVID crash low near $3,800), and late 2022 (around the $15,500 cycle low). In all instances, momentum changed ahead of price.

Moreover, Bitcoin’s three-day chart is showing a bullish divergence where the price made a lower low, unlike momentum.

This pattern also emerged prior to the mid-2021 corrective low and the FTX-induced bottom in 2022, both of which led to protracted recoveries.

These indicators suggest that selling pressure in the Bitcoin market could be nearing exhaustion, a condition often seen at market bottoms rather than temporary relief rallies.

Bitcoin Miner Capitulation Indicates BTC Bottom is Set

Bitcoin’s hashrate decreased by 4% by December 15, a trend that VanEck analysts Matt Sigel and Patrick Bush interpreted as “a bullish contrarian signal” linked to miner capitulation.

Historically, periods of sustained hash rate compression have preceded significant Bitcoin returns, they noted, indicating that since 2014, BTC has achieved positive 90-day returns 65% of the time following 30-day hashrate declines.

The signal becomes more pronounced over longer timelines, with positive 180-day returns occurring 77% of the time, with an average gain of 72%.

Related: Bitcoin sharks accumulate at the fastest rate in 13 years, as BTC drops 30%

Increasing prices could also enhance miner profitability and reinstate sidelined capacity.

Potential Bitcoin Rally in 4-6 Weeks, Per Macro Indicator

Bitcoin may be approaching a bottom as liquidity conditions improve, historically a precursor to significant BTC reversals.

Analyst Miad Kasravi’s backtest of 105 indicators demonstrated that the National Financial Conditions Index’s (NFCI) peak often precedes a Bitcoin rally by four to six weeks.

This indicator was evident in late 2022 and mid-2024, both leading to sharp upward movements. Traditionally, each 0.10-point drop has correlated with approximately 15%–20% upside in Bitcoin, with deeper NFCI readings indicating extended BTC uptrends.

As of December, the NFCI stood at -0.52 and is on a downward trend.

A possible catalyst is the Federal Reserve’s intention to convert mortgage-backed securities into Treasury bills, a move that Kasravi compared to the 2019 “not-QE” liquidity injection that led to a 40% Bitcoin rally.

Despite these indicators, many market observers expect Bitcoin’s price to drop further, with forecasts ranging from $70,000 to $25,000.

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