3 Bitcoin signals pointing to the bottom of the BTC market

Bitcoin (BTC) may form a local bottom after falling more than 35% from its two-month high around $126,200, based on technical and chain indicators.

Main Receptors:

Momentum, mining and liquidity indicators indicate that selling pressure is fading.

Macro liquidity suggests that a BTC recovery could begin in the next 4-6 weeks.

Bitcoin sellers are getting close to exhaustion.

Since December, Bitcoin's weekly stochastic RSI has turned from oversold levels, a setup seen near key historical breakout points, before the price rebounded, as illustrated by Trader Jesse in the chart below.

Similar bullish crosses appeared in early 2019 (after BTC dropped to $3,200), March 2020 (covid crash low around $3,800) and late 2022 (around $15,500 cycle low). In each case, the velocity changed first, while the price lagged.

Adding to the signal, Bitcoin's three-day chart is printing a bullish divergence where the price has bottomed, but not accelerated.

This pattern was seen before the mid-2021 correction low and the FTX-led bottom in 2022, both of which preceded a multi-month recovery.

These signs suggest that selling pressure in the Bitcoin market may dissipate in the near term, a situation that is more typical of market bottoms than temporary relief rallies.

Bitcoin mining capital shows the bottom entry of BTC

Bitcoin's hashrate fell 4% on the month Dec. 15, VanEck analysts Matt Siegel and Patrick Bush viewed as a “bullish contrarian signal” associated with mining.

Periods of sustained hash rate compression have historically led to stronger Bitcoin returns, he said, explaining 65% of positive 90-day returns since 2014 following BTC's 30-day hashrate decline.

The signal is strengthened on longer horizons, with positive 180-day returns 77% of the time and an average of 72%.

RELATED: Bitcoin Sharks Stop at Fastest Rate in 13 Years, BTC Down 30%

A price increase could improve mining profitability and bring lateral capacity online.

Bitcoin can rally in 4-6 weeks, one macro indicator shows

Bitcoin may be trending lower as liquidity conditions begin to improve, leading to historically large BTC reversals.

Analyst Miad Khasravi said a backtest of 105 indicators, the National Financial Conditions Index (NFCI), is the highest that usually leads Bitcoin's rally in four to six weeks.

This sign appeared in late 2022 and mid 2024, both ahead of a peaceful demonstration. Historically, every 0.10-point decline has been offset by a 15%–20% rise in Bitcoin, with deep NFCI readings indicating long BTC bullish levels.

As of December, the NFCI was sitting at -0.52 and trending lower.

A potentially encouraging move is the Federal Reserve's plan to shift mortgage-backed securities into Treasury bills, a move Kasravi compared to the 2019 “QE-not-QE” liquidity injection that preceded Bitcoin's 40% rally.

Despite these signs, many market watchers expect the price of Bitcoin to fall further, with their price targets ranging from $70,000 to $25,000.

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