Bitcoin's Longing/ Short ratio continues to be at multi-month highs, but the "classic" buy signal is no longer yielding profits, raising the risk that current market conditions may be leaning toward a bearish phase.
This development is particularly noteworthy because previously, when the Longing/ Short ratio of BTC was higher than that of altcoins, BTC often had a good chance of rising. This time, the pattern has been broken, and many analyses suggest that leverage may be hindering the price's recovery efforts.
- The BTC Longing/ Short ratio has risen again and remained high for several months, but the buy signals are no longer as effective as before.
- The "supply in profit" indicator and the gap between the 30SMA and 90SMA are reminiscent of the 2022 scenario, but there are conditions for a reversal if the price holds the key zone.
- The recovery scenario could be toward the $101,000–$103,000 resistance zone, but bear market risks increase if BTC falls and remains below $75,000 in January.
The Longing/ Short ratio is unusually high but not generating profits.
Bitcoin's Longing/ Short ratio has increased and remained high for months, but the "buy signals" that were once effective when BTC outperformed altcoins have not translated into profits in recent months.
The Alphractal analytics platform indicates that the BTC Longing/ Short ratio continues to rise, reflecting increased demand for Longing positions. What's unusual is that this indicator has remained at a high level for an extended period, rather than just experiencing short-term price swings.
Historically, in market behavior as described by the Alphractal, when the Longing/ Short ratio of BTC is higher than the Longing/ Short ratio of altcoins, this is usually a favorable signal to favor BTC. However, this pattern has been broken in the past few months, and the “clear buying opportunity” no longer yields the expected results.
Refer to the post on “buy opportunities” at the link above on Alphractal's X. It's worth noting that if many traders lean in the same direction, the risk of “Dump out” can also increase when the price moves against expectations.
Joao Wedson, founder and CEO of Alphractal, argues that leveraged traders may be hindering the market's recovery efforts. Related posts: Joao Wedson's account and his analysis of the recovery in the article on X.
The conditions for Bitcoin to reverse its trend depend on the $75,000–$80,000 range.
A bullish reversal scenario is conditioned on BTC holding above the $75,000–$80,000 range in January, preventing further weakening of "supply in profit" indicators and paving the way for a late "bullish cross" in February/early March.
According to AXEL Adler Jr. 's analysis, "Bitcoin supply in profit" is a key factor for a reversal. This indicator peaked at 19 million BTC in October and has since fallen to 13.5 million BTC at the time of this article.
Adler Jr also pointed out that the gap between the 30-period moving Medium (30SMA) and the 90-period moving average (90SMA) of “supply in profit” is 1.75 million BTC, similar to the setup in 2022, a period when the market experienced a prolonged downturn.
To avoid a similar outcome, buyers need to hold the price within the current range to keep the "supply in profit" above the 30SMA. If the price weakens, the "supply in profit" could slide below dynamic levels and worsen the trend structure.
In terms of timing, the 1.75 million BTC gap is narrowing at a rate of 28,000 BTC per day. If this narrowing pace continues, a bullish cross is projected for the end of February or the beginning of March.
This crossover prediction is only XEM valid if BTC does not lose the $75,000–$80,000 range in January. In other words, the price level is not just technical support, but also a condition for the indicator pattern to maintain its reversal logic.
The cyclical price structure suggests a pullback to $101,000–$103,000 before a trend is defined.
The cyclical pattern being compared suggests that BTC could rebound to the $101,000–$103,000 resistance zone after a negative weekly structure, but bear market risks would increase sharply if the price falls and remains below $75,000 in January.
In 2021, BTC 's weekly chart structure turned negative as the price fell below the Medium , signaling a change in the long-term trend. The market then saw a rebound to the 50-week moving average area before the bear market truly took over.
A similar scenario is unfolding: a negative weekly pattern, followed by a decline below the weekly moving averages. In this context, the probability of a technical rebound to the $101,000–$103,000 range is highlighted as a resistance zone to watch.
After a rebound, the downtrend could regain control, especially if BTC falls and closes below $75,000 in January. This is highlighted as a crucial boundary to distinguish a volatility reset in a major bull cycle from the start of a bear market.
Conclusion: Leverage and the $75,000–$80,000 threshold determine the balance of gains and losses.
The persistently high Longing/ Short ratio suggests expectations of a breakout, but the ineffectiveness of the signal poses a risk of correction; meanwhile, holding above $75,000–$80,000 could maintain the validity of the bullish crossover scenario at the end of February/beginning of March.
Key takeaways: (1) The Longing/ Short ratio has increased and remained high for many months, which is an "anomalous" sign, indicating that the crowd is concentrating positions but not achieving the same performance as before; (2) Cited on-chain indicators provide clear conditions revolving around the January price range; (3) The cyclical weekly structure underscores the possibility of a pullback to resistance before the market establishes its next trend.
Frequently Asked Questions
Is an increase in the Longing/ Short ratio of Bitcoin always a buy signal?
No. While an increase in the Longing/ Short ratio usually reflects bullish expectations, the content suggests that this time the signal "BTC has a higher Longing/ Short ratio than altcoins" has not translated into profit in the past few months, possibly due to market conditions and leverage.
Why is the $75,000–$80,000 range important for a BTC reversal scenario?
The $75,000–$80,000 range is cited as the condition for the "bullish cross" forecast of the supply-in-profit indicator to be meaningful. If BTC holds above this range in January, the probability of a late bullish reversal in February/early March is considered higher.
What does the $101,000–$103,000 mark mean in cyclical analysis?
This is a resistance zone mentioned as the target of a technical rebound after the weekly timeframe structure turned negative and the price fell below the weekly moving Medium , similar to the behavior described in 2021.
When does the risk of a bear market increase sharply under the conditions outlined?
Bear market risk is expected to increase if BTC falls and remains below $75,000 in January, following a potential rebound. This level is used to distinguish a "volatility reset" from the formation of a longer-term downtrend.
