Bitcoin shows buy signals but the bottom could be under $21K

Every bitcoin investor is looking for bitcoin buy signals hoping that the market has reached the bottom, but the price action this week suggests we’re not there yet.Evidence of this can be found by looking at Bitcoin’s (BTC) monthly returns, which were hit by a sharp drop “causing one of the biggest drops in daily returns in a monthly time frame for an asset class in its history” according to the latest Block Software Solutions Smart Market newsletter.

Bitcoin monthly returns. Source: Block Software Solution

Bitcoin continues to trade in ever narrower ranges and is slowly declining as global economic tensions increase. Whether the price will continue to fall is a popular topic of debate among cryptocurrency analysts, and the current main view is that it will continue to decline. Analysts will remain bearish until $45,000 price level is reached. According to Blockware Solutions, there are many indicators that point to a bearish outlook as long as BTC trades below $45,000 to $47,000 price levels.This includes the fact that Bitcoin took off in 2022 at $46,200 while the 180-week exponential moving average of the hull, which gives more weight to recent price action, indicates that the momentum for BTC is declining and is currently at $47,166.

BTC/USD vs 180-week exponential hull moving average 1 week chart Source: Blockware Solutions

Short-term breeders, defined as those who have been in the market for less than 155 days, have been particularly hard hit by market weakness, with the current short-term cost base of holders of $45,038. Taken together, these data points suggest sentiment for BTC will remain bearish as long as the price is below $45,000.

How low will bitcoin fall? Are we seeing bitcoin buy signals?

Despite the “no too optmistc” analysis at present, there are several signs that the market may be bottoming.According to the latest Glassnode Uncharted press release, after bitcoin fell below $ 30,000 in early May, “network activity increased as supply shifted due to network devaluation.”

BTC entity adjusted NVT. Source: uncharted

According to Glassnode statement,

“This phenomenon has historically signaled a high buying opportunity.”

In order to further back the claim that Bitcoin is currently in a good buying zone, Glassnode’s report highlighted the market may be in the process of searching for a very bottom.To further back the claim that Bitcoin is currently in a buying opportunity zone, the report pointed to an entity-adjusted sleep flow that was consolidating in what was previously considered an optimal entry area.

Bitcoin entity-adjusted dormancy flow vs. Bitcoin entity-adjusted dormancy. Source: Uncharted Blockware

Solutions also sees a range of data suggesting the market may be bottoming out, including a Mayer Multiple, an indicator comparing current market prices to the 200-day moving average, now “close to some of the lowest-history readings.”

Bitcoin Mayer Multiple. Source: Blockware Solutions

While multiple data points and signals seems to mutually confirm that the cryptocurrencies are currently in a bear market, other indicators point that the selling power may be exhausting and the market is very close to the bottom. While the exact bottom location is still unknown, we can see several indicators currently pointing to strong support near the $21,000 mark.The current fear and greed index remains very low, which clearly describes how low the confidence level is on the crypto market.

Fear & Greed index Source: alternative.me

The views and opinions expressed here are those of the author only and do not necessarily reflect the views of R4P Investement Club. You should do your own research when making your decisions.