Bitcoin’s January performance has triggered an event that preceded the start of each macro bull market, data reveals.
A little-known Bitcoin (BTC) price metric has just given a new bullish trend signal, and it has never been wrong.
As noted on February 8 by Caleb Franzen, Senior Market Analyst at Cubic Analytics, the Williams %R oscillator left its bottom zone for the first time since May 2022.
Analyst: Oscillator Crossover is a “Great Signal”
Bitcoin gained 40% in January and continued to hold higher levels has produced breakout signals in various on-chain indicators.
Some analysts are cautious, opting to wait and see if the improved conditions last, but for Franzen, the data from the Williams %R oscillator is of particular interest.
Williams %R is a momentum oscillator that measures how close BTC/USD is to its recent highs or lows. Momentum oscillators are used to gauge the strength of a price trend, and Bitcoin’s January performance has made it a prime test case.
“Bitcoin’s Williams%R 12-Month Oscillator Left ‘Oversold’ Threshold at January Monthly Close!” Franzen wrote in part of a dedicated Twitter thread.
“Historically, breaking out of the lower bound has signaled two things: 1. Cycle lows are in. 2. The bear market is over.”
He added that the phenomenon was a “great sign” while acknowledging that a bull run was not guaranteed.
However, an accompanying chart showed the close relationship between such Williams %R threshold crossings and subsequent long-term BTC price action.
The last one, for example, came in April 2019, when BTC/USD began its journey from bear market lows to finally reach all-time highs in November 2021.
Meanwhile, a “warning” comes in the form of variable deadlines for Williams %R. Franzen noted that only the 12-month iteration of the metric had turned bullish, with the 18-month version remaining “oversold.”
“If/when this crosses > oversold, it will add to the bullish case,” he added.
Signs of Bitcoin’s renaissance are becoming apparent and fast
Franzen is far from the only one keeping the faith when it comes to the current BTC 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 that saw it cross its previous all-time high since 2017.
Encouraging signs have also come from macroeconomic sources, in particular from the US Federal Reserve, as well as internal phenomena such as the long-awaited “golden cross” event on the daily chart.
Meanwhile, January saw a renewed inflow of institutional cash into Bitcoin, which took up the most resources as investors shied away from many altcoin products. The weekly entries for the last week of the month were the highest in seven months.
The views, thoughts, and opinions expressed herein are those of the authors alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
