Bitcoin (BTC) overdue for a rally as chain metrics reach historic levels: InvestAnswers
Popular crypto analyst InvestAnswers says an on-chain signal suggests Bitcoin (BTC) is overdue for a rally.
In a new strategy session, the pseudonymous analyst takes a look at Bitcoin’s realized price (RP), which records the value of all BTC at the price they were purchased, divided by the number of coins in circulation.
The analyst points out that historically, BTC has not stayed below RP for long.
“We’re counting down to the next halving and here we’ve been below the realized price … it’s now 170 days and the actual price is below that RP of about $21,000, suggesting that an uptick in the actual price is at the cards because we won’t be down here for long, at least many people think…
This is a rainbow picture of the realized price. And you can see how the Bitcoin price is mostly above the RP, most of the time… It’s about 97% of the time, 98% of the time it’s above that. Now it’s under. Now the question is, how does it shape up in history?”
According to the analyst, Bitcoin stayed below RP for 110 days in 2011, 240 days in 2015, 115 days in 2018, 8 days in 2020 and 170 days so far in 2022, suggesting that a BTC bounce may be imminent.
Also suggesting that Bitcoin is poised for a rally is the growing weakness in the US Dollar Index (DXY), the analyst says. DXY is the USD against a basket of other major fiat currencies and is traditionally thought to be inversely correlated to risk assets such as Bitcoin and crypto.
“This is a pretty cool sign because as we know, when DXY goes up, Bitcoin goes down and vice versa. They are inversely correlated. If history repeats itself – and we’ve been saying it a lot lately – this chart signals a possible breakdown.” But you could also argue that it has already broken down from 115 down below 109. But here we are again. If this happens, this will also be very good for the risk area.”
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