Bitcoin’s Risk-Off Metric Suggests Bullish Trend Ahead Amid ETF Hype

Bitcoin’s Risk-Off metric hits a low of 23.7, signalling low correction risk and a potential bullish trend. The Macro Chain Index indicates a likely surge beyond $100,000. Factors like the upcoming Bitcoin ETFs and decreased volatility contribute to a more stable market. Analysts warn of declining network activity, but macro indicators suggest the current situation may actually present a good opportunity for long-term investment.

Bitcoin has recently experienced a significant decline in the Risk-Off metric, dropping to 23.7. This is the lowest level we’ve seen since March 2019. A low Risk-Off value can often indicate a low risk of correction and a good chance that Bitcoin will experience a bullish trend in the near future.

Even though there’s a noticeable drop in network activity right now, macro indicators, particularly the Macro Chain Index (MCI), are signalling a potential rise in Bitcoin’s price above $100,000. Back on May 5, this Risk-Off indicator fell to its lowest point since Bitcoin was trading at around 4,000 dollars. Historically, such metrics positioned in the blue zone are reassuring, suggesting that correction risks are minimal.

In 2019, exactly when the Risk-Off signal hit a low-risk situation, Bitcoin saw a massive rally of 1,550%, eventually surging over $68,000 by 2021. The Risk-Off signal assesses a combination of six different factors. These include volatility measures, exchange inflows, and futures open interest. When you put all those together, they give a well-rounded picture of market correction risk, making it a useful tool for traders.

The last time we had such an indicator, Bitcoin was priced at just $4,000. Since then, things have changed drastically. A major thing is the expected approval of spot Bitcoin ETFs in the U.S. in 2024. This is anticipated to bring in institutional investments which will likely boost demand and stabilize the overall prices. Current reports say that institutions and public companies hold 9% of total Bitcoin supply now.

Cointelegraph Markets recently noted that of the Bitcoin supply, 5.5% is now owned by spot ETFs just a year after their launch. Major firms are joining the game, holding an additional 3.5%. These shifts in ownership dynamics appear to be reshaping the Bitcoin market fundamentally.

Fidelity Digital Assets also highlighted the drop in Bitcoin’s volatility, which now sits at three to four times less than that of stock indexes. The volatility has reduced significantly, from triple digits in earlier years down to a much more stable range. This trend illustrates a maturing market that absorbs new capital much better than before, resulting in less drastic price swings.

An uptick in mainstream adoption and improved regulatory clarity, coupled with Bitcoin’s perceived role as protection against inflation, is elevating its value considerably, leading to a higher price floor than we saw back in 2019.

According to the latest reports by Cointelegraph, the MCI is showing bullish signs. This is the first time since 2022—a year when MCI correctly identified the bottom of the market at $15,500. Typically, an RSI crossover from MCI has led to significant price increases in the past, including a 500% spike in 2019. With favorable funding rates and increasing futures interest, there’s a real possibility we could see Bitcoin cross the $100,000 threshold soon.

However, anonymous analysts like Darkfost have pointed out a sharp decline in Bitcoin’s network activity index. This shows a drop in transaction volume and daily active addresses since December 2024. The fewer unspent transaction outputs (UTXOs) hint at reduced demand for transaction space, often a sign of bearish activity. Yet, despite these indicators, the overall macro environment remains positive. This dip could just be an opportunity for investors looking to enter for the long haul.