Quant Reveals Metric That Predicted Bitcoin Top In Advance

An analyst has revealed a pattern in a Bitcoin indicator that may have signaled the cryptocurrency’s recent decline in advance.

Bitcoin Taker Buy Sell Ratio 100-Day EMA Has Seen Rejection From 1.0 Recently

In a CryptoQuant Quicktake post, an analyst explained a relationship between the BTC spot price and the 365-day moving average (MA) and 100-day exponential moving average (EMA) of the Taker Buy Sell Ratio.

The “Taker Buy Sell Ratio” here refers to an indicator that keeps track of the ratio between the taker buy and taker sell volumes of Bitcoin on all derivative exchanges.

When the value of this metric is greater than 1, it means that the taker buy volume is greater than the taker sell volume right now. Such a trend implies the majority sentiment in the sector is currently bullish.

On the other hand, the indicator being under the mark suggests the dominance of the bearish sentiment among the traders as sell orders are outpacing buy orders.

Now, here is a chart that shows the trend in the 365-day MA and 100-day EMA of the Bitcoin Taker Buy Sell Ratio over the last few years:

The relationship between these MAs of the metric and the BTC price | Source: CryptoQuant

In the above graph, the quant has highlighted the pattern that these two Bitcoin Taker Buy Sell Ratio MAs have followed alongside the cryptocurrency’s price over the years.

“The inflection point occurs at the intersection of these averages, where EMA100 above MA350 suggests a potential bottom, indicating a continuation of the upward trend,” explains the analyst. The November 2022 and October 2023 bottoms both took place alongside this pattern.

“Conversely, when EMA100 crosses below MA350, it points to a bearish scenario, signaling a possible trend reversal with the rise of sellers,” notes the quant. Examples of such tops include the November 2021 all-time high and February 2023 peak.

Besides these two types of crossovers, it would appear that there has been one other interaction that has also influenced the cryptocurrency’s price. And that is the retest of the 1 mark from the 100-day EMA Taker Buy Sell Ratio.

This line has acted as resistance and support for the indicator in the past. The level holding as support has generally been bullish for the asset, while it acting as resistance has led to bearish price action.

As is apparent in the chart, this EMA has recently observed a rejection from this line of significance. Interestingly, this rejection coincided with Bitcoin’s topping above the $44,000 level.

Thus, it would appear possible that the bearish pattern that formed in the 100-day EMA Taker Buy Sell Ratio may have hinted in advance at the drawdown BTC has seen since.