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Bitcoin saw a significant shift in trend; market sentiment also shifted in 2023. Since the break-up in consolidation, Bitcoin momentum has moved upward from a bearish market to the potential early stages of a new bullish market.
In a monthly newsletter, veteran quant investor and the inventor of the Hash Ribbon indicator, Charles Edwards, share essential industry updates, significant trends, and technical and fundamental analysis related to Bitcoin.
A Momentum-Driven Shift, A New Regime For Bitcoin
According to Edwards, as prices become more attractive, the market becomes saturated with long-term holders, those who do not intend to sell until prices are significantly higher.
In the analyst's opinion, long-term incumbents recognize the value of cryptocurrency and are "price insensitive;" once the market reaches that stage, the order books of the brokers become more illiquid, because there are fewer marginal salespeople. As prices become increasingly attractive, the market becomes saturated with long-term incumbents, those who no longer intend to sell until prices are significantly higher.
In the aforementioned table, Edwards stresses that Bitcoin is growing illiquid, with exponential growth of holders in the long run, which now account for 49 per cent of the network, another record.
For Edwards, once a burst of demand hits an illiquid backlog, highly undervalued assets explode in the near term. This is because there are very few active sellers in the marketplace; buyers do not have sellers to purchase. The result is an uptrend as the nearest vendors place orders.
The leverage ratio of the marketplace, an overall debt and market positioning capriole measure used by Charles Edwards, suggests a nearly identical model occurred in January 2023 as in the middle of 2021 when Bitcoin entered a phase of price discovery. The analyst wrote:
(…) "We saw the same long-term wind-up, surrender, and compression structure in the short term in mid-2021 that we saw in January 2023. The two lasted nine and a half weeks. In crypto, we refer to this as a "liquidity crisis on the sales side".
According to Charles Edwards and Capriole Investment, this phase is a significant turning point, the “beginning of a new regime.” Performance is expected to be positive in 2023 and higher in 2024.
Bitcoin Bear Market Bottom Proven?
Bitcoin's address percentage in profit measure has rebounded from a typical 50% to 70% bearish market on this date. The typical bear market pattern shows a performance grind down in addresses in profit as long-term holders see the value of their Bitcoin plummet.
(…) 'Profit percentage addresses rebounded significantly by 50-70%, a structure that usually sees some profit taking.
Related Reading: This Lesser Known Altcoin Blows Up 91% In The Last Week – Find Out Here
Related Reading: This Lesser Known Altcoin Blows Up 91% In The Last Week – Take a look here.
- In short, Edwards and Capriole Investments have identified confluences and several factors for the recent Bitcoin and other bullish breakouts in the months ahead:
- Bitcoin cycle decline struck typically -80% levels.
- In November/December, sentiment was at an all-time high with market coverage at its highest level.
- Force of gold in November/December as an advance to Bitcoin in January. More in our December report card.
- Read about it in our December newsletter.
It is probable that the Fed will suspend its rates and modify its policy in 2023.
Bitcoin is currently trading at $23.450. It is 2.1% lower over the past 24 hours despite the good news after the Federal Reserve (fed) has increased the basis points by 0.25%. Bitcoin has always been able to take advantage within seven days, up 1.8%. Bitcoin price action suggests a withdrawal to the line of support for an additional counterattack to regain the $24,500 level.
