Has BTC hit bottom? Nine on-chain indicators interpret current market trends

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Biteye
3 days ago
This article is approximately 1489 words,and reading the entire article takes about 2 minutes
Currently, some indicators show that Bitcoins decline is almost close to the bottom.

Original author: Biteye

Let me first state the conclusion:

1. At present, some indicators show that Bitcoin’s decline is almost close to the bottom.

2. The selling signal has not yet appeared. It is suitable to hold the currency or continue to buy in small amounts. There is no need to panic sell.

3. Even if the price falls below 50,000 in the next month, encryption will not end. Are you assured?

Although the current market situation is very similar to World War II, Germany + Japan are blindly fighting, and the corresponding German government and Mentougou are frantically selling coins, all thanks to China + Russia + the United States. So, will the turning point be August 6? Will the final victory be August 15?

Without further ado, Biteye has found 9 practical indicators on the BTC chain . Click on Thread to interpret the current market together.

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

AHR 999 Index

This indicator implies the rate of return of short-term fixed investment in Bitcoin and the deviation of Bitcoin price from expected valuation. How to use it?

When the AHR 999 index is < 0.45, the indicator will recommend buying;

When the AHR 999 index is between 0.45-1.2, the indicator will recommend buying fixed investment;

When the AHR 999 index>1.2, the currency price is already relatively high and is not suitable for operation.

Currently, the AHR 999 index is around 0.82, which is at the recommended level for regular investment.

Indicator link: https://oklink.com/zh-hans/chainhub/btc/chart-details/3155?tabs=dashboard#startTime=1618934400000

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

Bitcoin Rainbow Price Chart

The rainbow chart is a long-term valuation tool for Bitcoin that uses a logarithmic growth curve to predict the potential future price direction of Bitcoin. The warmer colors above show when the market may be overheated, which is a better selling point; the cooler colors indicate that the overall market sentiment is usually depressed, which is a better buying point.

There are 10 color bands in the chart. For example, today, July 9, BTC is at the ultra-low price of the blue color band Special Sale, which is suitable for buying. According to the trend of this chart, even if it falls below 50,000 in the next month, it will not touch the purple color band, which is the range where the indicator believes that encryption is over.

Indicator link: https://blockchaincenter.net/en/bitcoin-rainbow-chart/

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

MVRV (Market Value to Realized Value Ratio)

MVRV is a relative indicator, which is the ratio of the circulating market value (Market Cap, MV) to the realized market value (Realized Cap, RV), that is, the ratio of the total market value of BTC to the market value calculated from the last activity price of BTC, representing the profitability of BTC holders.

When MVRV exceeds 3.5, it usually means that the market has reached the top, because when MVRV is too high, the holders will make more profit and will tend to sell. When MVRV is lower than 1, it usually means that the market has reached the bottom, most holders are at a loss, and the willingness to hold will be greater than the willingness to sell, that is, the number of sellers in the market will decrease, which will increase the probability of price increases.

The current MVRV indicator is 2.29, which is between the so-called market bottom and top. Hold on to it and don’t sell it all.

Indicator link: https://cryptoquant.com/asset/btc/chart/market-indicator/mvrv-ratio?window=DAYsma=0ema=0priceScale=logmetricScale=logchartStyle=line

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

Coinbase Premium Index

The Coinbase Premium Index measures the difference in Bitcoin prices between Coinbase and Binance. When Coinbase prices are higher than other major exchanges, it generally indicates higher demand for Bitcoin among U.S. investors.

Generally speaking, negative readings often occur at local bottoms in prices and foreshadow subsequent increases. The indicator recently fell to -0.19, indicating weak demand and increased selling pressure from US investors, partly due to ETF outflows and the governments sale of confiscated assets through Coinbase. However, such readings often foreshadow price bottoms, such as in November 2022, when BTC prices rose by more than 50% within a few months of bottoming out.

At present, the Coinbase Premium Index has been negative for most of the period from May to June this year, just like last August and September, when the Bitcoin market was also in a boring consolidation period. Judging from this, the probability of a bottoming out and rebound is relatively high.

Indicator link: https://cryptoquant.com/asset/btc/chart/market-data/coinbase-premium-index?window=DAYsma=0ema=0priceScale=logmetricScale=linearchartStyle=line

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

200 Week Moving Average Heatmap

A color heatmap based on the growth rate of the 200-week moving average is used, and the price chart is assigned a color based on the percentage increase of the 200-week moving average month by month.

According to historical data, when you see orange and red dots appear on the price chart, it is a good time to sell Bitcoin when the market is overheated, while price points are purple and close to the 200-week moving average, it is a good time to buy.

We can see that the current price is a blue dot, which is a relatively cold time. It is more suitable to hold the currency or continue to buy in small amounts, and there is no need to panic sell.

Indicator link: https://lookintobitcoin.com/charts/200-week-moving-average-heatmap/

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

SOPR indicator (Spent Output Profit Ratio)

The calculation method is selling value/buying value, which is an indicator reflecting the profit/loss degree of an asset. If the selling price of an asset is higher than the buying price, it means that the asset is sold at a profit; otherwise, it means that the asset is sold at a loss.

When the SOPR value is greater than 1 and continues to rise, it means that the price continues to rise and the market continues to make profits. The market is about to enter the top and then start to fall, which is a sell signal. When the SOPR value is less than 1 and continues to fall, it means that the price continues to fall and the market continues to lose money. The market is about to enter the bottom and then start to rise, which is a buy signal.

The graph shows that when the SORP value drops sharply, it means that people in the market are selling at a loss. The more people are selling, the closer the market is to the bottom. So when the SORP value drops sharply, it means that a large number of sellers have sold and left, and the possibility of the bottom is relatively high at this time.

The current value of the indicator is 0.99. It has been hovering around 1 in the past month and has not been sustained. There is no obvious sell signal in the market yet.

Indicator link: https://studio.glassnode.com/metrics?a=BTCema=0m=indicators.SoprmAvg=0mMedian=0resolution=24h

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

2-Year MA Multiplier

The 2 Year Moving Average Multiplier indicator, which uses the 2 Year Moving Average (730 day equivalent, green line) and 5 times that moving average (red line), highlights periods when buying and selling Bitcoin would have produced huge returns.

Historically, when the price falls below the two-year moving average (green line), it is a signal to buy at the bottom, and buying Bitcoin will generate excess returns. When the price exceeds the two-year moving average x 5 (red line), it is a signal to sell at the top, and selling Bitcoin will generate greater returns.

At present, the price of BTC is in a position where it is neither up nor down, and there is still some distance from the red line. Although it has fallen repeatedly for so long, according to this indicator, it is not time to escape the top yet, so continue to hone your mind.

Indicator link: https://lookintobitcoin.com/charts/bitcoin-investor-tool/

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

Bitcoin spot net inflow/outflow

Despite BTCs sharp drop to nearly $54,000 on Monday, the total net inflow of US Bitcoin spot ETFs reached $294 million yesterday (July 8), the highest level in the past month.

The recent decline caused by the German governments massive sale of Bitcoin and Mentougous large repayments may be due to retail investors selling. It is not ruled out that institutions/new investors may take the opportunity to pick up bargains and hold BTC through spot ETFs. Will this be a signal of a rebound?

Indicator link: https://coinglass.com/en/bitcoin-etf

Has BTC hit bottom? Nine on-chain indicators interpret current market trends

German government, Mentougou wallet address

Since June 19, the German government has been selling BTC to “dump the market” in the past 20 days or so. Currently, there are 22,846 BTC left to sell. If calculated at a price of 57,000, it is worth 1.3 billion US dollars.

According to analyst Alex Krügers calculations, in the extreme case of a one-time sell-off by the German government and Mt. Gox (assuming Mt. Gox sells 30%), BTC may fall 10.5% in the short term, but the market can eventually absorb the selling pressure.

German government address: https://platform.arkhamintelligence.com/explorer/entity/germany…

Mentougou address: https://platform.arkhamintelligence.com/explorer/entity/mt-gox

In short, dont panic, continue to stock up on bread, and Ill leave you with a message: Persistence in doing something is a wonderful quality that is difficult for humans to possess. If you cant persist, then read it again.

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