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In a detailed market update, Charles Edwards, founder of Capriole Investment, has provided an in-depth analysis<\/a> of Bitcoin\u2019s current market position, highlighting a pivotal shift to an \u2018expansion\u2019 phase in the Bitcoin Macro Index. This transition is particularly noteworthy as it parallels conditions observed prior to historical price surges in Bitcoin\u2019s valuation.<\/p>\n
The crux of Edwards\u2019 update is the shift in the Bitcoin Macro Index, a complex model synthesizing over 40 metrics encompassing Bitcoin\u2019s on-chain data, macro market indicators, and equity market influences. The index does not take price as an input, thus providing a \u2018pure fundamentals\u2019 perspective.<\/p>\n
The current expansion is the first since November 2020, and only the third instance since the index\u2019s inception, with the two previous occasions leading to substantial price rallies in the following periods. Edwards elucidates this with a direct quote: \u201cThe transition from recovery to expansion is simply the optimal time to allocate to Bitcoin from a risk-reward opportunity for this model.\u201d<\/p>\n
A look at the Bitcoin chart reveals that the Bitcoin price rose by a whopping 400% during the last bull run from early November 2020 to November 2021, after the Macro Index entered the expansion phase. The first historical signal was provided by the Macro Index on November 9, 2016, which was followed by a massive bull run of almost 2,600% until Bitcoin reached its then all-time high of $20,000 in February 2018.<\/p>\n
In the short term, the technical outlook presents a mixed picture, according to Edwards. The derivative markets are indicating an overheated state, with low timeframe analysis suggesting a retracement could be imminent. Edwards introduces the \u2018Bitcoin Heater\u2019 metric, recently launched on Capriole Charts, which aggregate various derivatives market data and quantify the level of market risk based on the open interest and heating level of perpetuals, futures, and options markets.<\/p>\n
The below chart shows that most of the time when the Bitcoin Heater is above 0.8, the market corrects or consolidates. \u201cBut there are large exceptions to the rule: such as the primary bull market rally from November 2020 through to Q1 2021. [\u2026] We should expect this metric to be high more frequently in 2024 (much like Q4 2020 \u2013 2021),\u201d Edwards stated.<\/p>\n
The analyst concluded that the overall trend for Bitcoin remains positive, with major data points indicating a strong bullish scenario. However, he also cautioned about potential short-term risks in the low timeframe technicals and derivatives market. These, according to him, are common in the development of a bull run and could offer valuable opportunities if dips occur.<\/p>\n
At press time, BTC traded at $35,626.<\/p>\n
Featured image from Shutterstock, chart from TradingView.com<\/p>\n<\/p><\/div>\n\n","protected":false},"excerpt":{"rendered":"
In a detailed market update, Charles Edwards, founder of Capriole Investment, has provided an in-depth analysis of Bitcoin\u2019s current market position, highlighting a pivotal shift to an \u2018expansion\u2019 phase in the Bitcoin Macro Index. This transition is particularly noteworthy as it parallels conditions observed prior to historical price surges in Bitcoin\u2019s valuation. Bitcoin has recently […]<\/p>\n","protected":false},"author":1,"featured_media":11758,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[335],"tags":[302,1320,16139,5870,4139,5507,12892,2395],"class_list":["post-11757","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-crypto-news","tag-bitcoin","tag-bull","tag-echoing","tag-enters","tag-expansion","tag-index","tag-macro","tag-run"],"_links":{"self":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/posts\/11757","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/comments?post=11757"}],"version-history":[{"count":0,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/posts\/11757\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/media\/11758"}],"wp:attachment":[{"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/media?parent=11757"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/categories?post=11757"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lsd.hu\/wp-json\/wp\/v2\/tags?post=11757"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}