On-Chain Signals Suggest Bitcoin’s Sideways Phase is Ending

After experiencing six months of sideways movement, numerous on-chain metrics suggest that Bitcoin may be gearing up for a significant price breakout, according to analysts.

These forecasts align with separate predictions of an impending bull market based on seasonal trends, as Bitcoin is anticipated to shift from one of its worst months to one of its best on record.

Signals Indicating Bitcoin’s Bottom

As mentioned by CryptoQuant author Amr Taha, the Puell multiple of Bitcoin has dipped to a low of 0.4 for the first time since late 2022 – marking the absolute bottom of Bitcoin’s previous bear market following the FTX collapse.

The Puell multiple is a ratio that compares daily Bitcoin issuance in USD terms to its 365-day moving average. It serves as a gauge of miner profitability and is frequently used to detect market tops and bottoms, as miner activity can play a significant role in price fluctuations.

“The Puell Multiple is approaching levels that have historically indicated buying opportunities,” the analyst noted. “Investors in search of a long-term accumulation phase might view the current Puell Multiple near 0.4 as a sign that Bitcoin is undervalued, or at least nearing a market bottom.”

Earlier this week, Bitcoin’s hash rate reached a new all-time high, indicating increased competition among miners to successfully mine a Bitcoin block. Simultaneously, falling BTC prices and the approaching halving in April have greatly diminished the financial incentives linked to mining a block.

However, miner challenges aren’t the only indicators signaling a bottom: another CryptoQuant contributor – Axel Adler Jr. – reported on Thursday that the count of active addresses on-chain has dropped to levels not seen since July 2021, shortly after the mining ban in China.

Looking Ahead to October

Lastly, Bitcoin’s average perpetual futures funding rate turned negative on Wednesday for the first time since September 2023. Adler describes this as a bullish signal during a bull market.

“I believe the market will reach a conclusion in the next few weeks,” he stated. “I don’t foresee a significant drop unless a black swan event occurs. Following that, we need to climb higher and test the $70,000 mark.”

Bitwise released a memo on Tuesday highlighting that while Bitcoin generally performs poorly in September, the subsequent two months are typically among its best performing periods. October, specifically, averages a 29.5% gain for BTC.

Additionally, central banks are currently reducing interest rates, which usually has a favorable impact on all financial assets. The ECB, for example, cut its deposit facility rate by another 12 basis points on Thursday.