Bitcoin on-chain data highlights important similarities between 2019 and 2023 BTC price rally

Bitcoin’s (BTC) recent price rally from $16,500 to $25,000 can be attributed to a brief squeeze in the futures market and recent macroeconomic improvements. But while prices rose, data suggests many interested buyers (including whales) were left on the sidelines.

The recent rally to $25,000 shared many similarities with the bear market rally of 2019, which saw a 330% increase in Bitcoin’s price to peaks around $14,000 from a November 2019 low of $3,250. Recently, the BTC/USD pair rallied 60% from its lowest level in November 2022.

On-chain and market indicators regarding the 2019 rally are sending mixed signals about whether or not Bitcoin’s rally will continue. There are nevertheless strong reasons to believe that the market has reached a decisive turning point where it can either become a full-fledged bull market or fall back into a long-term bear trend.

Let’s look at the top five indicators to understand the current price dynamics in relation to the 2019 bull run.

Bitcoin Tackles Historic Trading Levels

Bitcoin’s price surpassed the 200-day moving average (MA) of $19,600, which could encourage paper traders looking to open a long position. Historically, this metric has acted as a bull-bear pivot line, with breakouts above it being bullish and vice versa.

BTC/USD usually retests the 200-day MA on a breakout, raising the possibility of a correction towards $19,500. However, this was not the case in 2019, as the price continued to rise without a pullback to the 200-day MA.

At the same time, traders are likely to take note of the 200-period weekly moving average of $25,100. Bitcoin price had never fallen below the 200-week MA until November 2022, and regaining this level could encourage technical buyers to join.

But until a breakout happens, traders can continue to stay on the sidelines. Funding rates for perpetual swaps are currently neutral, suggesting traders are awaiting confirmation.

Crypto Twitter trader Immortal found that the market is only “halfway” in terms of the duration of the current rally compared to that of 2019. The 2019 rally lasted 193 days from bottom to top, while only 92 days have passed since the rally in 2019. bottom 9 November 2023.

Immortal goes on to say that if the 2019 timeline fractal holds in 2023, BTC/USD could rise as high as $46,000 by March.

A stablecoin supply ratio oscillator is near its 2019 peak

Bitcoin’s stablecoin supply ratio (SSR) oscillator measures the market’s purchasing power. The indicator measures the relationship between Bitcoin’s market value and the stablecoin supply. Low readings on the SSR oscillator indicate higher buying power for stable coins. Conversely, a spike in the metric indicates overbought conditions.

Bitcoin’s February 2023 price rally saw the SSR oscillator tip towards levels not seen since 2019 and 2021. The indicator suggests that the positive trend may end soon. There is a small chance for a final push higher towards the psychological level of $30,000.

However, the data can be taken with a grain of salt due to the regulatory attack on the BUSD stablecoin, which caused a significant decrease in supply. It may have skewed the SSR oscillator to show overbought conditions.

One of the biggest concerns about the current surge is the absence of whaling. In contrast to 2019, when the number and holdings of BTC addresses with more than 1000 BTC increased as the price rose from the bottom and the whales have sold in the current rally. The difference between the number of whales and the price raises concerns about the sustainability of the positive trend.

Data highlights crucial bull-bear juncture

Investors increase their winning positions on pullbacks in an uptrend, and this is indicated when the SOPR (Spent Output Profit Ratio) indicator stays above one. The opposite happens in a downtrend where bears dominate the market by selling to rallies. A crossover of the metric above 1 is a potential trend reversal signal.

Glassnode’s 7-day moving average of the adjusted SOPR indicator shows that the bearish trend has likely reversed. The indicator turned bullish when BTC broke out above $20,800 in January 2023. The calculation retested the pivotal support level with Bitcoin’s price at $21,800, making it a crucial support level for a sustained uptrend.

Related: Bitcoin faces do-or-die weekly, monthly tight with macro trend at stake

Similarly, the price has moved above the average buying level for both short- and long-term holders, which is another signal of a potential trend reversal. This could be a sign that the market has reached a crucial turning point as the oscillators on the chain return to equilibrium.

The calculations also suggest that a potential bull trend seems likely while the price holds above the $21,800, $20,800 and $19,600 supports.

A weekly close above $25,100 may encourage derivatives and technical traders to buy into the current rally, but there are some warning signs that the market may reach overheated conditions and a quick correction towards lower support levels cannot be ruled out.

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