Over the past few weeks, Bitcoin has experienced significant price movements dragging its decline below the psychological level of $60,000.
This fall has affected the entire cryptocurrency market and it also reflects the potential for further crypto direction especially as we enter September.
However, there are some indications that this September may break the pattern and mark a bullish phase for cryptocurrencies.
These are 5 'signs' that you may need to look out for:
1. Declining Exchange Reserves
Bitcoin and Ethereum's dwindling exchange reserves suggest the potential for a crypto 'bull run'.
When investors move their assets from the exchange to 'cold' investments, it is usually a long-term holding strategy and this can reduce the supply available on the exchange.
Currently, the exchange reserve of Bitcoin is around 2.62 million and Ethereum is around 18.7 million. This potential is able to open to further significant price increases.
2. Market Sentiment: 'Fear' Outshines 'Greed'
The current market sentiment as measured by the Crypto Index is biased towards 'fear' which will usually be the starting point of a 'bull run'.
Extreme fear often signals a buying opportunity while extreme greed may indicate a market top.
This cyclical pattern indicates that a bullish phase may be approaching after the current 'fear' period.
3. Market Value to Realized Value (MVRV) Show Potential
The Market Value to Realized Value (MVRV) ratio is a key indicator that signals potential price appreciation.
When the MVRV ratio is below zero, it indicates that the holder is generally making a loss, indicating that the asset may be undervalued and needs to be corrected.
This usually precedes a price bounce and makes it a signal for the upcoming bull run of price increases.
4. Support and Resistance Levels
From a technical analysis point of view, Bitcoin price is currently below the 50-day and 200-day moving averages indicating a bearish or consolidation phase.
However, if Bitcoin moves above the average this could signal the start of a new bullish phase.
Bitcoin has tested and remained above this level, indicating that a level above it could lead to a resumption of the uptrend.
A break above this resistance could trigger a further rally and potentially signal the start of the next bull run.
5. Open Interest and Open Volume
Open interest and trading volume are important metrics to assess the potential for crypto upside.
Earlier this year, the price rally peaked in March when Bitcoin hit an all-time high of around $73,000. During this period, open interest increased peaking at over $75 billion and trading volume increased to over $199 billion.
An increase in both often signals strong market participation, which can prompt further price increases.
Based on the information shared, investors can further examine the movement of crypto prices that may have great potential to 'rocket' this September!