Two analysts see bitcoin bottom forming on distinct metrics

Two independent analysts have separately concluded that the bottom for Bitcoin (BTC) is in, each working from a different dataset. Charles Edwards looks at stablecoin liquidity, while a trader known as Root examines cycle structure.

Both assessments arrived early in September, within days of one another. Neither expects a sustained rally, however. Each made a more limited case: that the circumstances that define a bear market have ceased to exist.

Capriole's Hedge Ratio Hits Its Bullish Level

Edwards, who founded Capriole Investments, released his indicator on Sept. 4. His Market Hedge Ratio tracks the 30-day rolling ratio of USDT market cap to BTC market cap.

The reading dropped to -20.42%, hitting the -20.78% boundary shown on his chart. A falling ratio suggests capital is moving out of stablecoins and into Bitcoin.

His chart marks roughly nine comparable signals since January 2020. Most preceded price increases, though one reading in October 2021 came close to a cycle peak.

“It’s very hard for bad things to happen to Bitcoin when Capriole’s Market Hedge Ratio is this green. Downside is basically capped in last 5 years until it flips red. Typically this reading means we have week(s) of upside to run.”

Edwards did set a clear condition that would invalidate the signal. It remains valid only as long as the ratio stays positive, and his time frame covers weeks rather than months.

Root's Breakout Comes Two Months Early

Root, who writes at Bitcoin Strategy, arrived at the same conclusion using only price data. His chart looks at when the price reclaims the 200-day moving average, the 21-week moving average, and the short-term holder cost basis.

Earlier breakouts were spaced 1,375 days and 1,384 days apart, a difference of just nine days over roughly 7.5 years. The current breakout occurred 1,314 days after the 2023 signal, meaning about 65 days earlier than that pattern would suggest.

“The current breakout happened roughly two months ahead of schedule compared to previous cycles. While two months is still substantial, and a reason why we can’t entirely rule out a continuation of the bear market…”

That timing is ambiguous. Root points out that the four-year cycle placed this bottom four months early. The breakout therefore deviates considerably less than the low did.

BTC Trades Just 0.5% Above the Key Level

Bitcoin was trading at $79,755 at the time of writing, down 0.23% in the past 24 hours. Market capitalisation stands near $1.6 trillion. The price still sits above all three levels, though only narrowly.

The 21-week average is $79,355, leaving a margin of 0.5%. Below that, the short-term holder cost basis is $70,853 and the 200-day average is $69,785.

Those two levels are separated by about $1,000, forming a support zone near $70,000. Grayscale placed its own bottom estimate in the same area.

A weekly close below that zone would invalidate both theses at once. Holding above $79,355 keeps them viable.

The two analyses agree on direction and otherwise share very little. Edwards looks at weeks, while Root looks at a full cycle. Both published the level that would disprove their call.