Key Points:
Bitcoin's entity-adjusted dormant flow has dropped below 250,000, marking a historical buying zone.
The short-term holder NUPL has turned negative, indicating seller exhaustion.
Bitcoin's V-shaped and double-bottom chart patterns suggest a potential rise to between $118,000 and $124,500 in the short term.
Bitcoin's price has risen 5% from the local low of $108,650, with three indicators suggesting this price level may have become a phase bottom for Bitcoin.
An important indicator for determining whether the Bitcoin market has bottomed is the entity-adjusted dormant liquidity metric, which measures the ratio of Bitcoin's current market value to its annual dormant value (in USD).
Historical data shows that when this metric falls below 250,000 (red circle), it typically enters a "high-quality historical buying range," a phenomenon that often occurs before a significant rebound or the end of a correction. The metric dropped to a low of 133,300 on Thursday.
Historically, when the metric breaks above 250,000 after a downturn, it often marks the start of a new bull market. For example, in July 2021, Bitcoin bottomed and initiated a new bull market, with the metric entering the green zone. Bitcoin reached an all-time high of $69,000 on November 10.
Currently, the metric is signaling bullishness again, with Bitcoin's price expected to rise further from the current level of around $114,000, challenging historical highs.
According to Cointelegraph, the Bitcoin SOPR metric has also dropped to the 1.5 range, which historically aligns with phase bottoms.
The short-term holder NUPL metric for Bitcoin has turned negative, reflecting pressure on recent buyers (those holding for less than 155 days).
On Monday, on the X platform, on-chain data firm Glassnode stated: "Short-term holder capitulation events have historically marked market reset phases, often laying the groundwork for a new accumulation round."
"History shows that this capitulation zone typically marks local bottoms," crypto influencer Jack stated in a post on X on Tuesday, adding:
Historically, when the short-term holder NUPL metric is negative, it usually coincides with price bottoms during bear markets or correction phases. This reflects a general exhaustion of selling pressure.
Once the selling pressure subsides, demand from long-term holders or new buyers can stabilize and push prices upward.
For example, when the phase low in April was below $75,000, the NUPL metric was negative, and subsequently, the BTC/USD price rose 65%, reaching an all-time high of $124,500.
Since September 18, Bitcoin's price action has formed a V-shaped reversal on the 12-hour chart. Previously, Bitcoin had dropped 7.8%, hitting a low of $108,700 on Thursday.
During this pullback, buying strength increased, quickly pushing Bitcoin's price back to current levels. The RSI indicator rose from the oversold range of 27 to 53, indicating strengthened upward momentum.
As the price attempts to complete the V-shaped reversal, it is expected to rise further to the neckline of the pattern, around the $118,000 resistance area, a 4% increase from current levels.
Additionally, from a longer-term perspective, the double-bottom pattern on the daily chart is expected to break above the $118,000 resistance, potentially returning to the historical high of $124,500, resulting in a cumulative increase of 10% from the current price.
Crypto analyst Matthew Hyland stated that the Bitcoin market structure is "very clear," referring to the potential breakout of the daily double-bottom pattern and inverted head and shoulders pattern.
According to Cointelegraph, if BTC breaks through the $112,000 to $114,000 resistance area, the price is expected to rise further to the $140,000 range.
Related: Solana (SOL) price rebounds, new highs require multiple factors to drive.
Original: “Is Bitcoin (BTC) Price Bottoming at $108,000? Three Signs Suggest the Worst is Over”
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