Bitcoin Macro Index Enters ‘Expansion’, Echoing 400% Bull Run Surge
November 15 2023 - 2:30AM
NEWSBTC
In a detailed market update, Charles Edwards, founder of Capriole
Investment, has provided an in-depth analysis of Bitcoin’s current
market position, highlighting a pivotal shift to an ‘expansion’
phase in the Bitcoin Macro Index. This transition is particularly
noteworthy as it parallels conditions observed prior to historical
price surges in Bitcoin’s valuation. Bitcoin has recently
experienced a sharp uptick, ascending from $34,000 to an interim
high of $38,000. After a brief period of resistance, the price
corrected to approximately $36,500. Edwards highlights this
movement as a critical technical victory, with Bitcoin overcoming
and holding above the major resistance benchmarks of $35,000 on
both the weekly and monthly timeframes. Related Reading: Bearish
Divergence? Bitcoin Price Rises, But Network Growth Sends Warning
Signals This consolidation above key resistance levels sets a
bullish context in the high timeframe technical analysis,
positioning Bitcoin in a strong technical stance according to
traditional market indicators. “The recent breakout into the 2021
range offers the best high timeframe technical setup we have seen
in years. Provided $35K holds on a weekly and monthly basis in
November, the next significant resistance is range high ($58-65K).”
Bitcoin Macro Index Enters Expansion The crux of Edwards’ update is
the shift in the Bitcoin Macro Index, a complex model synthesizing
over 40 metrics encompassing Bitcoin’s on-chain data, macro market
indicators, and equity market influences. The index does not take
price as an input, thus providing a ‘pure fundamentals’
perspective. The current expansion is the first since November
2020, and only the third instance since the index’s inception, with
the two previous occasions leading to substantial price rallies in
the following periods. Edwards elucidates this with a direct quote:
“The transition from recovery to expansion is simply the optimal
time to allocate to Bitcoin from a risk-reward opportunity for this
model.” Related Reading: Why $36,300 Is the Key For Bitcoin’s Next
Big Bounce: Insights From Liquidity Map A look at the Bitcoin chart
reveals that the Bitcoin price rose by a whopping 400% during the
last bull run from early November 2020 to November 2021, after the
Macro Index entered the expansion phase. The first historical
signal was provided by the Macro Index on November 9, 2016, which
was followed by a massive bull run of almost 2,600% until Bitcoin
reached its then all-time high of $20,000 in February 2018.
Short-Term Technicals And Derivatives Market Analysis In the short
term, the technical outlook presents a mixed picture, according to
Edwards. The derivative markets are indicating an overheated state,
with low timeframe analysis suggesting a retracement could be
imminent. Edwards introduces the ‘Bitcoin Heater’ metric, recently
launched on Capriole Charts, which aggregate various derivatives
market data and quantify the level of market risk based on the open
interest and heating level of perpetuals, futures, and options
markets. The below chart shows that most of the time when the
Bitcoin Heater is above 0.8, the market corrects or consolidates.
“But there are large exceptions to the rule: such as the primary
bull market rally from November 2020 through to Q1 2021. […] We
should expect this metric to be high more frequently in 2024 (much
like Q4 2020 – 2021),” Edwards stated. The analyst concluded that
the overall trend for Bitcoin remains positive, with major data
points indicating a strong bullish scenario. However, he also
cautioned about potential short-term risks in the low timeframe
technicals and derivatives market. These, according to him, are
common in the development of a bull run and could offer valuable
opportunities if dips occur. At press time, BTC traded at $35,626.
Featured image from Shutterstock, chart from TradingView.com
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