Bitcoin: Time to Start Accumulating?
Although it is impossible to know exactly when the market bottom will occur, there are several indicators that suggest it is time to start accumulating Bitcoin. These indicators include technical analysis and on-chain data.
Bitcoin (BTC) has been in a rut, and BTC's price is likely to stay in its current downtrend. However, as I mentioned last week, when nobody is talking about Bitcoin, that's usually the best time to buy Bitcoin. So, even though the current outlook for BTC isn't great, I still believe it's a good idea to buy Bitcoin while it's relatively low.
It seems that the market is not too confident in Bitcoin's ability to rebound from its recent price drop. With the Fed's dedication to combating inflation, and analysts predicting more interest rate hikes, it seems that Bitcoin may have a tough time recovering in the short-term.
It's no secret that the Fed's recent interest rate hikes and quantitative tightening have been tough on consumers. But according to some experts, there may be light at the end of the tunnel. They say that eventually, the Fed's actions will lead to a decrease in the cost of goods and services. And while we may see some more volatility in the markets in the short-term, the long-term outlook for Bitcoin looks promising.
Bitcoin may not be a good investment right now from a short-term perspective, but those with a longer investment horizon may still find it a worthwhile addition to their portfolios.
There are three charts that suggest investors should buy Bitcoin. The first chart shows that Bitcoin is undervalued compared to other assets. The second chart shows that Bitcoin is a good investment because it has outperformed other assets in the past.
Bitcoin investors rejoice! A new tool shows that the two-year MA multiplier is on the rise.
While the current 72% correction in Bitcoin's price from its all-time high is certainly brutal to endure, it is not outside of the norm when compared to previous drawdowns from all-time highs. In fact, BTC's price saw a 55% correction in July 21, a 71% drop by March 2020, and an 84% correction in December 2018. So, while the current situation may be painful, it is not unprecedented.
It is clear that the recent market drawdown has been significant, but it is important to put it into perspective. Comparing the data against the two-year moving average multiplier, we can see that the market has actually been following a long-term uptrend. After dropping below the two-year moving average, the market carved out a trough and then consolidated for a few months before resuming its upward trend. This suggests that the recent market volatility is not necessarily indicative of a long-term change in direction.
The current market conditions could be described as a consolidation zone, with prices remaining below the two-year moving average. This is in line with historical patterns, and suggests that prices may continue to fluctuate in this range in the short-term. However, there is no clear sign of a bottom yet, so it is difficult to predict where the market will move in the longer term.
The golden ratio multiplier: what it is and how to use it.
Overall, the indicators suggest that Bitcoin is currently undervalued and has potential to grow in the future. This makes it a good time to invest in Bitcoin for long-term growth.
I believe that cryptocurrencies will become increasingly popular in the coming years.
“The chart explores Bitcoin’s adoption curve and market cycles to understand how price may behave on medium to long term time frames. To do this, it uses multiples of the 350 day moving average (350DMA) of Bitcoin’s price to identify areas of potential resistance to price movements.”
I believe that the Swift 350DMA is a very effective indicator for predicting both intra-cycle highs and major market cycle highs for Bitcoin price. It is clear that the indicator has a strong track record of success, and I believe that it can continue to be a valuable tool for traders in the future.
“An effective tool because it is able to demonstrate when the market is likely overstretched within the context of Bitcoin’s adoption curve growth and market cycles.”
Bitcoin's price is currently below the 350DMA and similar to the two-year MA multiplier. Dollar-cost-averaging into extreme lows has proven to be a wise method for building a Bitcoin position. This could be a great opportunity to buy Bitcoin at a discounted price.
Looking at Bitcoin's one-week relative strength index (RSI), it's clear that the asset is nearly oversold. However, comparing the weekly RSI to BTC's candlestick chart shows that accumulation during oversold periods can be a profitable tactic.
Bitcoin's MVRV Z-score suggests it's undervalued right now.
The recent drop in the MVRV indicator is a sign that Bitcoin may be undervalued at its current price. This metric measures the ratio of BTC's market capitalization to its realized capitalization, or the amount people have paid for BTC compared to its value today. If the market capitalization is lower than the realized capitalization, it may mean that BTC is currently undervalued.
Bitcoin's MVRV indicator is currently printing an extremely low reading, according to analyst JJ from Jarvis Labs. This suggests that the market capitalization of Bitcoin is far outstripping its realized capitalization, meaning that the current price is not sustainable in the long term. JJ warns that a sharp correction is likely, and advises investors to be cautious.
The MVRV Z-score is a valuable tool for determining when Bitcoin is undervalued or overvalued in relation to its fair price. According to analytics firm Glassnode, the Z-score can help investors identify market tops and bottoms. When the market value is significantly higher than realized value, it is typically a sign that the market is due for a correction. Conversely, when market value is lower than realized value, it is often a sign that the market is undervalued and presents a buying opportunity. By monitoring the MVRV Z-score, investors can gain a better understanding of when to buy or sell Bitcoin.
Looking at the chart, it appears that Bitcoin is in the midst of a bottoming process and possibly entering the early stages of accumulation. This is based on the fact that the current -0.16 MVRV score is in the same range as previous multi-year and cycle bottoms for Bitcoin's price. While this is just one interpretation of the data, it's a compelling one that suggests that now may be a good time to start accumulating Bitcoin.
It is important to remember that the price of Bitcoin is highly volatile and can drop significantly. Investors should not rely on any one indicator when making investment decisions.
It's no secret that the crypto market is in a bit of a slump right now. Prices have been down for several months and don't seem to be showing any signs of recovery in the near future. This can be frustrating for investors who are trying to time the market, but it's important to remember that market bottoms are notoriously difficult to predict. Instead of trying to time the market, investors should focus on finding confluence among a variety of metrics and indicators that align with their investment thesis.
Bitcoin's current on-chain metrics and technical analysis indicators suggest that dollar-cost-averaging into a manageable position is a sensible move. The key is risk management. Don't invest more than you can afford to lose, and you won't have to worry about losing your shirt.
I am excited to be writing this newsletter for Cointelegraph! Each Friday, I will be providing insights, analyses and early-bird research on potential emerging trends within the crypto market. I believe that this market has great potential and I am looking forward to helping our readers capitalize on it!
