Bitcoin Approaches a Rare Setup as Super-Cycle Speculation Grows – BTC May Rally If…

Bitcoin [BTC]

Bitcoin remains a focal point of interest for investors, even though it is nearly 30% below its all-time high. Currently trading at $92,231, it finds itself in a crucial zone that continues to spark debates between bullish and bearish investors. Many traders see this critical level as a potential tipping point that could either propel Bitcoin toward the much-anticipated $100,000 mark or lead to a pullback into the $80,000 range. Insights derived from on-chain data and sentiment indicators are now helping investors understand how to position themselves moving forward.

Can the One-Year Change Signal the Next Rally?

Historically, Bitcoin’s one-year performance change has proven to be a reliable predictor of the early stages of both bull and bear markets. As of now, this one-year change stands at -4.5%, indicating that Bitcoin has not yet fully entered bearish territory. This slight decline also resembles a rare scenario observed in previous cycles, where Bitcoin’s one-year price change dipped into negative territory only to be followed by a significant rally, similar to what occurred ahead of the 2021 bull run.

Bitcoin year over year change.

Source: Alphractal

To provide context, the previous cycle began in March 2020 when Bitcoin hit a low of around $3,782, eventually soaring to an all-time high of $64,850—an increase of over 1,600% within the cycle. While such explosive gains are not guaranteed, a return to a positive one-year percentage change could enhance Bitcoin's chances of making a significant upward move toward a new all-time high. Conversely, if the one-year change fails to improve, it may signal the beginning of a deeper downturn and another bear market.

Is the Percent Change Sufficient to Confirm a Bear Phase?

Monitoring Bitcoin’s yearly percent change will not be the only factor in determining if the cryptocurrency is entering a prolonged decline. Other technical indicators will also play an important role. One key metric is Bitcoin’s two-year simple moving average (SMA), which is currently around $84,500. Historically, this level has acted as a significant indicator of downside risk. Analyst Joao Wedson cautions that failing to maintain this level greatly increases the likelihood of capitulation.

Bitcoin 2 year SMA.

Source: Alphractal

Analysis of Bitcoin’s Liquidation Heatmap has indicated where liquidity clusters are positioned around this SMA support, offering insights into price reactions. Currently, market liquidity appears limited around the $85,400 region. However, traders are showing substantial liquidity both above and below this level, with notable clusters forming from $86,817 up to the $90,000 zone on the upside and between $81,609 and $81,733 on the downside. These areas often serve as demand zones, where the price tends to approach before making a significant move. If liquidity from $86,000 to $90,000 serves as a catalyst, Bitcoin may rally from this range. If this support fails, Bitcoin might drop below the $84,500 level and slide toward $81,000, increasing the risk of further decline.

Market Sentiment Remains Bullish

Despite some technical uncertainties, overall market sentiment appears to be bullish. Community sentiment indicators, which allow traders and investors to express their price outlook, currently show strong optimism—with around 80% of the 5.9 million voters favoring a bullish scenario for Bitcoin. Although sentiment alone cannot guarantee the confirmation of a bull market, influential figures in the industry are also expressing confidence. For instance, Changpeng Zhao, co-founder of Binance, recently shared on X that he believes a super-cycle may be on the horizon.

He commented, “I could be wrong, but Super Cycle incoming,” attributing part of this outlook to recent developments in the United States, including the reclassification of crypto in certain realms, which he interprets as a positive sign for the sector. While still speculative, the idea of a super-cycle could potentially drive Bitcoin back toward its previous all-time high and reinforce the historical trend of a brief negative yearly change preceding a major rally.

Final Thoughts

As the market evolves, Bitcoin continues to be a key player in the world of cryptocurrency. Understanding these trends and indicators is crucial for investors navigating this volatile landscape.