Bitcoin (BTC) Shows First Buy Signal in 4 Years...But Is the Bottom Confirmed?

▲ Bitcoin (BTC)

Bitcoin (BTC) has flashed its first buy signal since November 2022 in the midst of a bear market, but the market is still in an early stage to declare a confirmed bottom.

According to crypto media outlet Cointelegraph on July 3 (local time), Bitcoin supply indicators have added a signal pointing to a potential end of the bear market in 2026. However, analysts cautioned that the appearance of this signal does not necessarily mean the price decline has ended.

Crypto analyst Axel Adler Jr., a contributor to on-chain analytics platform CryptoQuant, stated in a blog post on the 4th that a key buy signal has returned. The Advanced Net UTXO Supply Ratio, an indicator that measures the proportion of Bitcoin supply last moved in a state of profit or loss, has re-entered negative territory for the first time in approximately four years.

Adler explained, "After the ratio fell into deeply negative territory, it crossed the signal baseline again during its rebound, generating multiple buy signals in late June and early July." He added, "This is the first buy signal since November 2022, which was the bottom of the previous bear cycle."

However, Adler drew a line, stating that the UTXO Supply Ratio signal does not necessarily imply a macro bottom has been reached. He analyzed, "Confirmation is possible when the ratio stays above 0 and the price rises alongside it," adding, "A negative scenario would be the indicator falling back into negative territory without price support."

Another CryptoQuant contributor, Darkfost, also assessed that this signal shows the possibility of a market inflection point. Darkfost stated, "While it may not stop Bitcoin's decline, several signals are emerging that point to seller exhaustion," adding, "The next phase is demand recovery, and that process may take time."

The key is the proportion of supply in a loss state. Adler projected that the 90-day simple moving average of supply in loss would reach its bear market reversal target within two months. He stated, "Until then, capitulation selling is more accurately seen as an ongoing process rather than a completed fact."

-Bitcoin supply indicators showed a buy signal for the first time since November 2022.

-Analysts diagnosed that while the signal appears near the bear market bottom, it does not imply a confirmed macro bottom.

-Demand recovery and improvement in supply in loss indicators were presented as the next variables for confirming a Bitcoin rebound.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*