Bitcoin long-term calculations show possible bear market reversal

Bitcoin has been moving sideways for the better part of a week after recovering from a monthly low of around $17,900. The number one cryptocurrency hinted at a potential breakout, but once again the bulls are losing momentum, leaving BTC’s price stuck at the current the levels.

At the time of writing, Bitcoin (BTC) is trading at $19,500 with a 2% gain over the past 24 hours and sideways movement over the past week. The crab-like price action is repeating itself throughout the crypto market with major assets moving either sideways or to the downside.

Bitcoin forming a convincing bottom?

Data from research firm Santiment indicates that Bitcoin has moved sideways over the past 4 months with increases in volatility over that period. Regardless of BTC’s price, the research firm claims that the cryptocurrency may be bottoming out based on several metrics.

First, Santiment looked at the cryptocurrency’s distribution or the amount of BTC currently being sold in the market. After the pronounced crash from the 2021 highs, the current BTC market, the research firm claims, looks like the period of 2017 to 2019.

As shown in the chart below, the price of Bitcoin saw a decline in its average dollar invested age (BTC) and market capitalization to realized value, a metric used to measure investor behavior. As shown in the chart below, when the MVRV crashed, with the average dollar invested in the opposite direction, Bitcoin tends to move sideways.

This crab-like price action may last for years, but they suggest that the cryptocurrency is finally reaching a long-term bottom. Additionally, social volume, the number of people talking about Bitcoin on social media, has decreased following the price action.

This indicates that levels of euphoria are low and nearing bottom in 2018. During these times, there are usually levels of leverage and speculation in the market.

Santiment wrote the following about the similarities between Bitcoin’s current price and its price action in 2018. At the time, the cryptocurrency hit a new all-time high, entering a multi-year bear market:

Bitcoin’s long-term metrics have been showing encouraging signs of a turnaround for a few months now, despite prices being stuck in the mud. (…) looking at the long-term data the current situation does not look as dire as it might seem from an external perspective. Of course, history doesn’t repeat itself, but it can rhyme.

This is when BTC’s price can push back on the bears

Despite the data shown above, Bitcoin price has shown a high correlation with traditional stocks. The cryptocurrency moves more and more in step with major older stock indexes, such as the S&P 500 and Nasdaq 100.

At the same time, these assets have been and will likely continue to experience new selling pressure as long as the US central bank (Fed) maintains its current monetary policy. Set in motion to curb inflation, the Fed has raised interest rates and reduced its balance sheet.

The latest US economic data, as reported by NewsBTC, indicates that the financial institution may continue to put pressure on inflation, stocks and Bitcoin. While this status quo remains, the crypto market is unlikely to form a convincing bottom, or at least may see upside potential limited.