After six months of trading sideways, multiple on-chain indicators suggest that Bitcoin could finally showing soome signs of life.
Now many hope that Bitcoin is about to transition from one of its worst-performing months to one of its best on record.
Bitcoin’s bottom is in?
CryptoQuant analyst Amr Taha shared that Bitcoin’s Puell multiple indicator reached a low of 0.4 for the first time since the end of 2022, which was the absolute bottom of Bitcoin’s last bear market following the collapse of FTX.
The Puell multiple is a ratio that compares daily BTC issuance in USD terms to its 365-day moving average.
It’s a measure of miner profitability and is often used to identify market tops and bottoms since miner behavior can impact price movements big time.
“The Puell Multiple is nearing levels where it historically signaled buying opportunities. Investors looking for a long-term accumulation phase might interpret the current Puell Multiple near 0.4 as a sign that Bitcoin is undervalued, or at least nearing a market bottom.”
Preparing for October
Bitcoin’s average perpetual futures funding rate flipped negative on Wednesday for the first time since September last year. In a bull market, CryptoQuant analyst Axel Adler Jr. says this is a good signal.
“I think the market will make a decision in the next couple of weeks. I don’t expect a major drop unless a black swan event occurs. After that, we need to rise higher and test 70K.”
Bitwise published a memo on Tuesday explaining that while Bitcoin typically performs poorly in September, the following two months are usually some of its best-performing periods.
For example, October averages 29.5% gains for BTC. Central banks are currently lowering interest rates, which is typically positive for all financial assets.
The ECB lowered its deposit facility rate by another 12 basis points on Thursday. It looks like everything is set for a real Uptober.
Miners capitulation is over?
Bitcoin’s hashrate also reached a new ATH earlier this week, so it’s more competitive than ever for miners to mine a Bitcoin block.
But declining BTC prices and April’s BTC halving have reduced the financial rewards to half, putting strong pressure on miners.
Miner troubles aren’t the only bottom signal, as Adler wrote that the number of active addresses on-chain has fallen to lows last seen in July of 2021, shortly after China’s mining ban.
I think the market will make a decision in the next couple of weeks. I don't expect a major drop unless a black swan event occurs. After that, we need to rise higher and test 70K.
— Axel 💎🙌 Adler Jr (@AxelAdlerJr) September 10, 2024
If these on-chain indicators and seasonal trends hold true, Bitcoin could be poised for a quite nice price increase in the coming months.
But it’s important to note that past performance doesn’t guarantee future results, and the crypto market remains highly volatile and unpredictable.
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