- Bitcoin‘s Macro Index is showing a bearish divergence with lower highs while price makes higher highs, potentially signaling market weakness.
- Multiple on-chain metrics suggest Bitcoin is currently experiencing significant turbulence in the short to mid-term.
- Despite concerning signals, analysts note that key indicators haven’t reached “overheated” or cycle-top levels typical of a market peak.
Bitcoin (BTC) faces potential bearish pressure as a collection of price metrics reveals troubling divergence patterns. The cryptocurrency, which has struggled to maintain momentum near its all-time highs, is showing signs that on-chain indicators are losing their bullish characteristics, raising questions about the sustainability of recent price action.
Capriole Investments’ Bitcoin Macro Index has displayed a concerning pattern since late 2023. As highlighted in a recent social media discussion on March 27, the index has been creating lower highs while BTC price continues making higher highs—a classic bearish divergence pattern that often precedes significant market corrections.
"Not great," responded Charles Edwards, founder of Capriole, when confronted with the index’s recent performance. He added, "But… when Bitcoin Macro Index turns positive, I won’t be fighting it."
The Bitcoin Macro Index, created in 2022, leverages machine learning to analyze a comprehensive set of on-chain and macro market indicators that help determine Bitcoin’s relative value throughout historical market cycles. Notably, the model deliberately excludes price data and technical analysis as inputs, focusing instead on fundamental metrics.
This isn’t the only warning sign for Bitcoin. CryptoQuant, an on-chain analytics platform, identified four key metrics currently in flux in one of its recent Quicktake blog posts. The platform’s contributor Burak Kesmeci noted that Market Value to Realized Value (MVRV), Net Unspent Profit/Loss (NUPL), and the Inter-Exchange Flow Pulse (IFP) metric—which turned bearish in February—all suggest turbulence ahead.
"All of these metrics suggest that Bitcoin is experiencing significant turbulence in the short to mid-term," Kesmeci wrote. "However, none of them indicate that Bitcoin has reached an overheated or cycle-top level."
For market conditions to improve, Kesmeci suggests that the IFP metric would need to climb back above its 90-day simple moving average (SMA).
The current pattern mirrors elements of previous bull markets, leading some analysts to question whether BTC/USD has already established its long-term peak for this cycle. Nevertheless, the difference between current indicators and those typically seen at market tops provides some reassurance for bulls.
Bitcoin has battled macroeconomic headwinds throughout 2024, affecting its performance despite the positive catalyst of spot ETF approvals and the recent halving event. According to Capriole’s website, the Macro Index was specifically designed to provide insight into Bitcoin’s cyclical position, making the current divergence particularly noteworthy for investors.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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