• Bitcoin’s [BTC] price has rallied by 32% on a year-to-date (YTD).
• CryptoQuant analysts have observed a pattern that suggests the formation of a long-term bottom.
• To experience strong bullish momentum, BTC needs to detach from traditional financial markets.
Bitcoin Price Rally
Bitcoin’s [BTC] price has rallied by 32% on a year-to-date (YTD). This indicates that it is significantly correlated to the traditional financial markets and its continued growth in the face of prevailing macroeconomic conditions is largely contingent upon its ability to decouple from them.
Pattern Observed in Market Bottoms
Pseudonymous analyst Grizzly observed BTC’s 200-day moving average and its realized price and found a pattern previously observed in market bottoms. The pattern, which suggests the formation of a long-term bottom, is characterized by the crossing or overlapping of the 200-day moving average and the realized price, moving from the top to the bottom. This was also observed in 2019, 2015, and 2012 after which BTC experienced a long-term upward trend.
Net Unrealized Profit/Loss Ratio
Another analyst Baro Virtual considered BTC’s Net Unrealized Profit/Loss ratio (NUPL). He found that this market situation was similar to what happened in spring 2019 when it broke its 365-day moving average and BTC experienced strong bullish momentum. However, after encountering rejection at 0.15 – 0.25 medium term resistance range, BTC’S NUPL index tested its 365 day MA which served as support for it. The successful hold of this MA will lead to solid bullish momentum if BTC detaches itself from traditional financial markets according to Baro Virtual.
Impact Of Federal Reserve Interest Rates On Crypto Prices
On 1 February 2021, The Federal Reserve raised interest rates by quarter percentage point marking smallest rate adjustment since March 2020 but surprisingly crypto prices fell slightly; Bitcoin’s price dropped by 0.2% while Ethereum dropped by 0.3%. This indicates that despite decoupling attempts crypto prices are still closely linked with traditional finance markets like US stocks etcetera