Bitcoin Macro Index Signals Bear Market as Price Metrics Diverge
The Bitcoin Macro Index signals a potential bear market for Bitcoin, as several key metrics exhibit bearish divergence. Created by Charles Edwards, the Index relies solely on on-chain and macro-market data. Analysts note significant macro turbulence, emphasizing the need for specific metrics to recover for a positive outlook.
Bitcoin (BTC) presently faces the possibility of entering a new bear market, as a multitude of price metrics exhibit a concerning “bearish divergence.” This analysis was brought to light during a social media discussion on March 27, where Bitcoin analysts noted indicators from Capriole Investments’ Bitcoin Macro Index showing signs of weakness.
The Bitcoin Macro Index, developed by Charles Edwards in 2022, utilizes machine learning to assess numerous metrics, thereby providing insights into Bitcoin’s relative value across historical cycles. Edwards notes that this model exclusively incorporates on-chain and macro-market data, deliberately excluding price data or technical analysis.
Since late 2023, the Index has shown a pattern of lower highs while Bitcoin’s price has been recording higher highs, a phenomenon referred to as “bearish divergence.” While this pattern is characteristic of prior bull markets, it raises the possibility that BTC/USD may have already reached a long-term peak. Edwards expressed his concerns, stating that the Index’s current performance is “not great.”
Market analytics have indicated that Bitcoin is currently undergoing significant macro turbulence. As detailed in a recent CryptoQuant blog post, several on-chain metrics are exhibiting instability. Contributor Burak Kesmeci highlighted that while these metrics reflect significant volatility in the short to medium term, they do not indicate that Bitcoin has attained an overheated or cycle-top status.
The metrics in question include the Market Value to Realized Value (MVRV) and the Net Unspent Profit/Loss (NUPL), as well as the Inter-Exchange Flow Pulse (IFP) metric, which turned bearish in February. Kesmeci concluded that for a recovery in sentiment, the IFP must surpass its 90-day simple moving average (SMA).
In summary, the Bitcoin Macro Index signals potential bearishness for Bitcoin, suggesting that the cryptocurrency might be heading towards a bear market. The Index’s indicators have begun to diverge negatively, foreshadowing possible instability, despite Bitcoin not showing signs of having reached a peak yet. Investors are advised to monitor key metrics such as the IFP for any shifts that could indicate market recovery or further declines.
Original Source: cointelegraph.com
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