Analysis: Market Sentiment Inflection Point Imminent, BWTS Pattern Indicates Rebound Potential
BlockBeats News, December 6, On-chain data analyst Murphy stated that the short-term Behavior-Weighted Trend Signal (BWTS) can be used to identify true hodler selling pressure and trend capitulation behavior. This indicator considers not only whether investors are selling BTC at a loss, but also can be used to measure the "held for a while" forced liquidation chips.
Historical data shows that whenever the BWTS (red line) and BTC price (black line) show a divergence pattern, it means that panic selling is gradually being cleared, often leading to a rebound or reversal trend. After the Luna rug pull in May 2022, causing the BWTS, which had already returned to the zero axis, to deviate significantly again, breaking the previous divergence pattern, the rebound ultimately did not turn into a reversal but further entered a deep bear market phase. The current shape of the BWTS is similar to before, which can be interpreted as having the conditions for a rebound, or it can be said that until the divergence is not broken, the rebound is not over.
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