This on-chain indicator has appeared again. The last time it showed up, the market went straight into a deep bear phase.

[BlockBeats] Recently, I’ve noticed a pretty interesting on-chain indicator—the Behavior-Weighted Trend Signal (BWTS). What’s so impressive about this thing? Not only can it show who is selling at a loss, but more importantly, it can catch those “holders who suddenly can’t take it anymore after holding for a while” and decide to sell at a loss.

Looking through historical data, I found a pattern: every time the BWTS (that red line) diverges from the BTC price (black line), it’s basically a signal that panic is about to clear out, and usually, a decent rebound follows, sometimes even a full reversal. But there are always exceptions—remember what happened with Luna in May 2022? Back then, the BWTS had already returned to the zero axis, but that explosion caused the indicator to diverge sharply again, breaking the previous divergence pattern. The so-called rebound failed to save the day, and the market went straight into a deep bear phase.

Looking at the current BWTS pattern, it does look a bit like that previous time. How should we interpret this? You could say the technical conditions for a rebound are present now, or to put it another way—as long as this divergence pattern isn’t broken, this rebound might not be over yet. Of course, history doesn’t repeat itself exactly, but it often rhymes.