Bitcoin's 7-Day Index Rises 0.6% Suggesting Early Accumulation Phase

The cryptocurrency market, while appearing calm on the surface, is showing signs of a potential shift in Bitcoin sentiment. The 7-day moving average of the Bitcoin Combined Market Index (BCMI) has risen to approximately 0.6, a figure that traders often interpret as an early sign of optimism. This increase in the BCMI suggests a potential early accumulation phase, as profit-taking has slowed and on-chain indicators have improved. The index's rise hints at a possible early accumulation phase, which could signal a bullish trend for Bitcoin.

In contrast, the 90-day average of this index remains stable at 0.45, suggesting that the market isn’t overheated yet. The BCMI is a combination of many factors like the Fear & Greed Index, unrealized gains (NUPL), investor profitability (MVRV), and spending trends (SOPR). When this index is below 0.15, it is a sign of extreme fear and a possible buying opportunity. But if it rises above 0.75, it is a sign of excessive excitement, a warning sign that a downturn could happen soon.

Historically, these signs have sometimes marked the start of a BTC price uptrend. For now, the BTC long-term trend is in neither fear nor greed. But if the short-term rebound holds, it means there is growing confidence of a price rally among traders. The change in the BCMI suggests underlying strength while the broader market remains cautious.

Bitcoin experienced a 0.9% drop in price to $106,057 in the last 24 hours. The 4-hour timeframe of the TradingView chart includes Fibonacci retracement levels, a tool for identifying possible support and resistance zones. The key levels highlighted were $110,000, $100,000, $95,000, and $80,000. These are price points where Bitcoin’s price could face selling pressure or find stability in the short term. In addition, the Average Directional Index (ADX), which measures trend strength, stood at 20.73. This figure points to some directional momentum in the market, even though it doesn’t indicate an extremely strong trend. The recent dip, though minor, is proof of a consolidation period after price uptrends earlier in May.

The Relative Strength Index (RSI) at 35.75 is near the oversold region, suggesting that selling activity is nearing exhaustion even though it was previously aggressive. The occurrence of the rebound during a period when there’s a slowdown of profit-taking is a shift that happens before accumulation phases. During this phase, investors accumulate BTC more aggressively. The broader participation in the Bitcoin market remains a key factor to watch. Historically, a gradual or steady increase in active addresses, even during market downturns, has signaled that the worst may be over. This trend, combined with the current on-chain indicators, suggests that Bitcoin could be poised for a price rally.

Analysts have identified several data points that suggest Bitcoin could continue its rally. One prominent analyst, Kevin, noted that Bitcoin has received a rare weekly hash ribbons buy signal, positioning it for significant upside. Additionally, another analyst envisions Bitcoin hitting $200,000 by the end of 2025, with a potential extension to $250,000 the following year. These predictions are based on the current market conditions and the potential for further liquidity. The recent inflow of funds into Bitcoin ETFs has also been a notable development. Despite market uncertainties, spot Bitcoin ETFs have recorded significant inflows, indicating unwavering optimism among institutional investors. This sustained inflow streak, which began in mid-May, has continued to drive the cumulative total net inflows recorded since the inception of Bitcoin ETFs in January 2024. The data shows that BlackRock's IBIT has been a significant contributor to this inflow streak, while other firms like Ark 21Shares and Fidelity have seen outflows.

The neutral funding rates on Binance further support the potential for BTC growth. The funding rates hovering near zero indicate a lack of excessive leverage, which could contribute to a more stable and sustainable price increase. This neutral environment, combined with the positive on-chain indicators and the inflow of funds into Bitcoin ETFs, suggests that Bitcoin could be on the cusp of a price rally.