Bitcoin [BTC] seemed poised to embark on a new upward trend, as important on-chain indicators hinted at an imminent breakout from the $90K-108K range.
One of these indicators, the choppiness index (CI), which measures BTC price activity in relation to its price consolidation, suggested that the current sideways movement was nearing its conclusion.
Supporting this view, on-chain analyst Checkmate asserted,
“The #Bitcoin Choppiness Index is fully charged and primed for trending. As discussed in late November, the prediction was that we would experience several weeks of choppy consolidation before moving away from the $100k threshold. And now, we are at that point.”
Historically, as illustrated in the chart provided, a sharp increase in the weekly CI (depicted in red) indicated consolidation (shown as purple blocks).
Conversely, a decline in CI coincided with significant uptrends or downtrends (seen as orange blocks). With the CI approaching a turning point post a recent surge, a pullback could signal the start of a renewed upward or downward trend for BTC.
With the arrival of the new pro-crypto Trump administration, market sentiment was leaning towards the former scenario (a likely uptrend).
Alleviation of BTC Supply Pressure
Another positive sign was a decrease in BTC supply pressure from long-term holders (LTH). In its most recent “weekly on-chain” report, Glassnode pointed out a notable reduction in selling pressure from LTH.
“Selling pressure from long-term investors has decreased, along with reduced volumes being deposited to exchanges for selling purposes.”
The firm highlighted that profit-taking from this group amounted to $4.5B in December but has since plummeted to below $400M in January. Consequently, the trend appeared to be shifting towards renewed BTC accumulation.
“Currently, the overall supply held by LTH is displaying signs of growth, indicating that the trend of accumulating and holding is outweighing the pressure to distribute among this group.”
Additionally, the average price range over a 60-day period also pointed towards a potential breakout.
Glassnode mentioned that the current sideways pattern was narrower than the historical 60-day price range, which typically foreshadows bullish breakouts.
“The chart highlights instances where the 60-day price ranges were narrower than the current trading range. In each case, significant volatility followed, with most occurrences happening during the early stages of bull markets or before late-stage capitulations in bear markets.”
Combining these metrics indicates the possibility of a strong uptrend surpassing $100K. However, the impact of macroeconomic developments and announcements from the Trump administration on this outlook remains uncertain.