5 indicators traders can use to know when a crypto bear market is ending

The bull market is over and traders are feeling the effects of a long crypto winter. Bitcoin’s (BTC), price has fallen to levels not even bears anticipated. Some investors are probably scratching their heads wondering when BTC will rebound from this dramatic decline.

The prices are falling daily and everyone is wondering: “When will the market bottom?” and “How long will this bear market last?”

Although it is impossible to predict the end of the bear market, past downtrends can give some clues as to when it will.

Here are five indicators traders use to tell when crypto winter is approaching.

The crypto industry is beginning to recover

Widespread layoffs in the crypto ecosystem are a sign that crypto winter is here. Companies look to cut expenses to make it through the tough times ahead.

In 2018, and 2019, news headlines were full of layoff announcements by major industry players like ConsenSys, Bitmain, and crypto exchanges like Huobi, Coinfloor, and technology companies like Bitmain.

Recent layoff announcements, such as the 18% staff reduction at Coinbase and the 10% decrease at Gemini, are alarming. Given that the bear market has just begun, layoffs will likely increase. It’s likely too early to use this metric to prove that the bear market has fallen.

Companies hiring again, and the launch of new projects with significant funding announcements are good indicators that a crypto spring may be upon us. These are signs that funds are returning to the ecosystem, and the worst of the bear markets is behind us.

Keep an eye out to see if the 200-week SMA of Bitcoin becomes resistance or support

The 200-week SMA is a technical indicator that Bitcoin has entered a bearish phase. It occurs when Bitcoin falls below it and then rises above it.

BTC/USD 1-week chart. Source: Twitter

The chart shows that previous instances in which the price of Bitcoin fell below the 200-week SMA (the light blue line) and then rose back above it, are highlighted in purple arrows. These were preceded by uptrends in market.

As an additional confirmation that the market trend is turning positive, a solid BTC price rebound above the realized price (which is the aggregate purchase price for all Bitcoin) can be used.

The RSI is the king of calling bottoms

The relative strength index (RSI) is another technical indicator that can help you determine when a bear market’s lows are.

In particular, the Bitcoin RSI has fallen into oversold territory in bear markets past and fell below 16 at the same time as BTC’s low.

BTC/USDT 1-day chart. Source: TradingView

The confirmation that the low is here doesn’t occur until the RSI rises above 70 into overbought territory. This indicates that there has been an increase in demand.

Market value to realized values

Z-score (market value to realized value) is a metric used to “identify periods when Bitcoin is extremely overvalued or undervalued in relation to its ‘fair worth’.”

MVRV Z score. Source: LookIntoBitcoin

The chart shows the current market price of Bitcoin. The orange line is the realized price. The red line is the Z-score, which is a standard deviation test that identifies extremes between market value (or realized value) in the data.

The chart shows that previous bear markets were marked by a Z-score lower than 0.1. This is highlighted in the green box at bottom. Only after the metric reached a score of 0.1, did it confirm that there was a new uptrend?

This metric, based on historical performance, suggests that Bitcoin could face more downside in the future. Then, there will be a prolonged period of sideways price movement.

Related: Three Arrows Capital considers bailout, Kyle Davies breaks his silence: Report

Moving average multiplier for 2-years

The 2-year moving average multiplier is a final indicator that can help Bitcoin investors determine when the bear market has ended. This metric tracks Bitcoin’s 2-year moving mean and a 5-x multiplier of the MA (two-year moving average) with Bitcoin’s price.

Bitcoin Investor Tool: 2-Year MA Multiplier. Source: LookIntoBitcoin

The market enters bear market territory if the price of Bitcoin falls below the 2-year MA. An uptrend would occur once the price rose above the 2-year MA.

The flip side is that the price climbed above the MAx5 line by 2 years signaled a bull market and was a good time to profit.

This metric can be used by traders to indicate when it is a good time to accumulate, as shown in the green shaded areas. Or, they can wait for the price of BTC to clear the 2-year, which will signal that the bear markets are over.

No matter how a trader applies the indicators, it is important to remember that none of them are perfect and that there is always the possibility of more downside.

You would like to learn more about investing and trading in the crypto markets?

Twitter users express their dismay at the market downturn. A bitcoin CEO plans to use crypto winter. Nearly $100M has been withdrawn from US crypto funds in anticipation for hawkish monetary policies. How to survive in a bearish market? Tips for beginners: Large Bitcoin liquidations can mean that one man’s pain will be another man’s joy — It’s time to buy the dip.com You should do your research before making any investment or trading decision.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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