Bitcoin’s Bottom? Three Signs Investors Should Watch - Crypto Economy

TLDR

• Stochastic RSI and bullish divergences suggest that selling momentum is reaching exhaustion.
• Miner capitulation, reflected in the hashrate drop, historically precedes positive returns.
• Macroeconomic liquidity points to a potential rally start within the next 4 to 6 weeks.

Following a correction of over 35% from its all-time high of $126,200, market expectations are centered on whether the price has finally bottomed out. Technical indicators and on-chain metrics indicate that Bitcoin could be in the process of establishing a Bitcoin local bottom, halting the bleeding and paving the way for a new upward trend.

In this context, the weekly Stochastic RSI is one of the most promising indicators, having recently moved out of oversold levels. Generally, this pattern coincides with critical inflection points, such as the lows seen in 2019, the post-COVID crash in 2020, and the aftermath of the FTX collapse in 2022.

Added to these factors is a bullish divergence on the three-day chart, where the price is marking lower lows but momentum is not, suggesting an exhaustion of selling pressure.


Miner Capitulation and Macro Liquidity Injection

Miner behavior is another crucial factor. In this regard, VanEck indicated that the recent 4% drop in hashrate is a bullish contrarian signal linked to miner capitulation. Statistically, since 2014, when the hashrate compresses in this manner, BTC has generated positive returns 65% of the time in the following 90 days, with the probability increasing to 77% over a six-month horizon.

On the other hand, the macroeconomic landscape is sending signals of relief. Analysis of the National Financial Conditions Index (NFCI) suggests that peaks in tightening often precede rallies in crypto assets.

This scenario could allow the market to establish a Bitcoin local bottom within the next 4 to 6 weeks, driven by a Federal Reserve asset rotation into Treasury bills—similar to the 2019 liquidity injection that triggered a 40% price surge.

In summary, while general sentiment remains cautious and some analysts still foresee drops toward lower support zones, technical data indicates that capitulation is nearing completion, laying the groundwork for a solid recovery in the short term.