Bitcoin Bottom Fishing: The Art of Timing Market Reversals

• The price of Bitcoin continues to trade downwards as losses pile up.

• Market participants are largely bullish at this time, citing chart patterns as potential bullish signals.

As the price of Bitcoin falls below previous highs, traders and investors are actively gauging the price movement in a bid to stay ahead of the curve. Since the inception of 11 Bitcoin Spot Exchange Traded Funds (ETFs), Bitcoin’s price has tumbled.

Previously hovering over $45,000 for the first time in two years, Bitcoin is struggling to sustain momentum at this time and key players are beginning to plot an exit plan.

Speaking to this effect, a popular cryptocurrency analyst highlighted the metrics and factors that signal an actual bottom in the market.

“For me to be convinced that we reached the local bottom, I would want to see high volume prints with a negative perps basis.” The analyst wrote.

Looks like #Bitcoin continues the pattern we've been monitoring since September.

4 months in the green, one in the red.

If history keeps repeating, February should be strong. pic.twitter.com/fWbXw4rlvK

— Jelle (@CryptoJelleNL) January 23, 2024

For some traders, the Crypto Fear & Greed index aids in their decision-making process, as extreme fear and greed are a sign to initiate purchase.

At present, bullish and bearish sentiments are equal, thus leaving the market neutral, as the Fear and Greed index sits at 50. Should the numbers surpass 50, sentiments are poised to change. On the other hand, if the index drops below 20, it would mean that extreme fear and intense selling have coincided.

In the long term, if traders continue to exit the market, it could be an indicator of extreme bearishness, which could in turn open the path for the market to bottom and begin an upward correction.

Bitcoiners speak on what to expect in the coming weeks

As one analyst observed on X, formerly Twitter, Bitcoin might be on the verge of making a much-needed price reversal that could send it back to the top, according to market charts.

“Bitcoin Sentiment Cycle: Historically, after transitioning from capitulation to hope, optimism, and finally to belief, BTC has often experienced a brief phase of anxiety, marked by a price correction.” The analyst wrote.

#Bitcoin Sentiment Cycle: Historically, after transitioning from capitulation to hope, optimism, and finally to belief, #BTC has often experienced a brief phase of anxiety, marked by a price correction.

This pattern appears to be repeating itself, as we're currently witnessing a… pic.twitter.com/dBwX57D6cP

— Ali (@ali_charts) January 23, 2024

As he observed, the pattern seems to be repeating itself, as the market is currently experiencing a 20% correction in Bitcoin’s price. Historically, this pattern has shown itself to be a temporary setback before the market continues in an uptrend, he concluded.

Similarly, analyst Jelle is convinced that the price decline is no different from a typical temporary bear trend. He recalls that Bitcoin has tripped in price value in the past year, and has only dropped by 20% from its peak. “It may feel like it’s over, but we’ve weathered worse storms before. Just another higher low, on the road to new all-time highs.” He stated.

Bitcoin trades at a press time price of $38,980, after losing nearly 10% of its weekly gains. On the flip side, trading volume is picking up with a 52% upsurge sustained within 24 hours.