Bitcoin (BTC) Bottom Signal: Capriole's Hedge Ratio Hits -20.42% Threshold

Capriole's Hedge Ratio Flashes Green

Two independent analysts concluded within days of each other that Bitcoin (BTC) no longer shows the conditions that define a bear market — and neither relied on the other's data. The first call came from Charles Edwards, founder of Capriole Investments, who published his signal on Sept. 4. His Market Hedge Ratio tracks the ratio between USDT and Bitcoin market capitalizations on a rolling 30-day basis, and the reading fell to -20.42%, touching the -20.78% threshold marked on his chart. A falling ratio of this kind indicates capital rotating out of stablecoins and into Bitcoin — historically one of the cleaner flow signals for the asset. The mechanic matters: when stablecoin market cap grows faster than Bitcoin's, the ratio falls, in effect showing dry powder piling up relative to the asset it could buy. His weekly chart records roughly nine comparable signals since January 2020, most of which preceded sustained rallies. One notable exception arrived in October 2021, close to a cycle top — a caveat Edwards himself acknowledges. His framing remains blunt: bad things struggle to happen to Bitcoin when the Market Hedge Ratio prints this green, and over the past five years downside has been effectively capped until the indicator flips red. Typically, he argues, a reading like this means weeks of upside lie ahead. Just as important as the signal is its falsifiability. Edwards set an explicit invalidation condition — the call stands only until the ratio turns red — and bounded his time horizon in weeks rather than months. He also stopped short of declaring a bull run. Like the second analyst covered below, he argues something narrower: bear-market conditions have stopped being present, which is a different claim from confirming a new uptrend. For traders deciding whether to buy weakness or wait, that distinction matters more than any headline bottom call, and it is the question at the center of Bitcoin market commentary this week.

A Breakout Two Months Ahead of Schedule

Root, the pseudonymous analyst who publishes at Bitcoin Strategy, reached the same verdict from price structure alone. His breakout chart tracks the moment price reclaims three levels together: a 200-day moving average, a 21-week average and the cost basis of short-term holders. All three reclaims have printed, leaving price above every one — barely. Previous breakouts landed 1,375 days and 1,384 days after their respective signals, a gap of just nine days across roughly 7.5 years, an unusually tight rhythm for cycle work of this kind. The current breakout arrived 1,314 days after the 2023 signal, about 65 days ahead of that pattern. Root calls the deviation roughly two months — substantial enough that he won't entirely rule out a bear-market continuation. The counterweight: the four-year halving cycle placed this bottom four months early, so the breakout actually deviates far less from its rhythm than the low itself did. For readers new to cross-cycle comparisons, our Bitcoin Rainbow Chart guide explains the method step by step. Price data underlines how thin the margin is: Bitcoin traded at $79,755 at the time of the analysis, down 0.23% over 24 hours, with market capitalization near $1.6 trillion. The 21-week average at $79,355 leaves a cushion of just 0.5%. Beneath it, the short-term holder cost basis now stands at $70,853, with the 200-day average just below at $69,785 — two levels roughly $1,000 apart that form a support shelf near $70,000. Grayscale, whose spot Bitcoin ETF anchors its product lineup, has placed its own bottom estimate in that same zone. The bottom debate stays live at the top of the industry too: Vitalik Buterin recently made news by staking 90% of his net worth against a 50% Bitcoin crash call. Readers tracking the market in real time can follow live spot and futures prices on Gate.

The Level That Would Break Both Calls

In our reading, the convergence is notable precisely because it is methodologically independent: a stablecoin-liquidity flow metric and a pure price-structure cycle model flagged the same turn within days, sharing almost no inputs. The primary record here is Edwards' Sept. 4 post — the signal document itself — which states the invalidation explicitly: the call survives only until the ratio flips red. Root's equivalent tripwire is the shelf near $70,000. For conviction holders who plan to hodl through the cycle, both frameworks now offer the same service — a defined level that would prove the bottom call wrong. Long-term bulls like Jordi Visser, who sketches an $800K–$1M Bitcoin scenario in a $100 trillion crypto market, frame far higher ceilings — but the near-term test is simple: hold $79,355.

Edwards' Sept. 4 posthttps://x.com/caprioleio/status/2095749912017395901