The data shows that Bitcoin’s January performance was driven by an event that preceded the start of each macro bull market.
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The price indicator just gave a new signal to launch – and it has never been wrong.
As Caleb Franzen, senior market analyst at Cubic Analytics, noted on February 8, the Williams %R oscillator has broken out of its lower zone for the first time since May 2022.
Analyst: Crossing Oscillators “Great Sign”
Bitcoin’s 40% rally in January and continuing to hold higher levels signaled a breakout across various on-chain indicators.
Some analysts are cautious, preferring to wait and see if the improved conditions last, but for Franzen, the data coming from the Williams %R oscillator is of particular interest.
Williams %R is a momentum oscillator that measures how close BTC/USD is to recent highs or lows. Momentum oscillators are used to measure the strength of a price trend, and Bitcoin’s performance in January made it a better test.
“Bitcoin’s 12-Month Williams%R Oscillator Breaks ‘Oversold’ Threshold After January’s Monthly Close!” Franzen wrote in part of a special thread on Twitter.
“Historically, a breakout of the lower bound has signaled two things: 1. Cycle lows have arrived.” 2. The bear market is over.”
He added that this phenomenon is a “great sign” and admits that bull growth is not guaranteed.
The accompanying chart, however, showed a close correlation between such crossing of the Williams %R threshold and the subsequent long-term behavior of BTC prices.
The most recent, for example, occurred in April 2019, when BTC/USD began its journey from bear market lows to an all-time high in November 2021.
Meanwhile, the “warning” comes in the form of different timeframes for the Williams %R. Franzen noted that only the 12-month iteration of the metric was bullish, while the 18-month version remained “oversold.”
“If/when it goes beyond > oversold, it will add to the argument,” he added.
Signs of Bitcoin’s revival are emerging quite quickly
Franzen isn’t alone in keeping the faith when it comes to BTC’s current price action.
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Over the weekend, popular trader Credible Crypto described the status quo as “identical” to Bitcoin’s late 2020 breakout, which saw it surpass its previous 2017 high.
Encouraging signals are also coming from macroeconomic sources, notably the US Federal Reserve, as well as domestic developments such as the highly anticipated gold cross event on the daily chart.
Meanwhile, January saw a resurgence of institutional money into Bitcoin, draining most of the resources as investors shunned many altcoin products. Weekly inflows in the last week of the month were the highest in seven months.