Majority of Bitcoin Indicators Are Saying Bottom Is In

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Arman Shirinyan

While Bit­coin strug­gles to break above $20,000 range, indi­ca­tors sug­gest that bot­tom is in

Most cyclic Bit­coin indi­ca­tors are hint­ing at a rever­sal ral­ly as the asset has final­ly bot­tomed out—according to the CEO of Cryp­to­Quant on-chain and mar­ket hub. The ana­lyst sug­gests that open­ing big shorts on Bit­coin right now is riski­er than usu­al, as most indi­ca­tors are being suppressed.

The ana­lyst has shown six indi­ca­tors used by traders and investors to deter­mine the cur­rent state of the mar­ket and its bounce poten­tial by using on-chain data like real­ized loss and prof­it, the MVRV ratio and BTC min­ers’ positions.

The first indi­ca­tor, the ratio between unre­al­ized loss and prof­it, is used for deter­min­ing if the whole net­work is in a state of loss or prof­it. When­ev­er indi­ca­tors show a val­ue above zero, the net­work can be con­sid­ered prof­itable. If the val­ue drops below 0, the net­work is in a state of loss.

His­tor­i­cal­ly, when­ev­er the Bit­coin net­work’s NUPL dropped below zero, we saw a rapid bounce of the first cryp­tocur­ren­cy, or at least a short-term con­sol­i­da­tion peri­od short­ly after. Cur­rent­ly, Bit­coin is on its way to the 2019 low, which became a start­ing point for the cryp­to mar­ket’s ral­ly in 2021.

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Anoth­er notable indi­ca­tor is the Min­er’s Posi­tion Index, which reflects the vol­ume of sup­ply con­cen­trat­ed in Bit­coin min­ers’ hands. Recent­ly, large min­ing com­pa­nies and pri­vate min­ers have been active­ly sell­ing more than 100% of their month­ly hold­ings to cov­er expenses.

When­ev­er min­ers’ sell­ing activ­i­ty ris­es on the net­work, Bit­coin is get­ting clos­er to the capit­u­la­tion point and is no longer fac­ing such large sell­ing pres­sure on its way up.

At press time, Bit­coin is chang­ing hands at $20,440, with a mod­est 2.3% price increase in the last 24 hours.



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