Another key metric is flashing Bitcoin Buy signal. This is according to a tweet by popular crypto analyst/influencer Mohit Sorout. According to Sorout, the so-called DCA indicator, which he calls the “mother of all BTC bullish signals,” has flashed for only the fourth time so far.
DCA stands for Dollar Cost Averaging, a technique used by cryptocurrency investors where they buy a set amount each day to secure a favorable average price. Elaborating further on the exact parameters of his indicator, Sorout explains that “the Daily DCA indicator tracks the profit/loss of buyers who hypothetically bought a certain $Bitcoin daily for the past one year (365 days).” “.
Bitcoin Market Has Returned To Profitability – A Bullish Sign?
The bullish signal from the DCA indicator is another signal of bitcoin The price rally since the beginning of the year has brought the market back to profitability. This is important because analysts look at returns Bitcoin The profitability of the market after a prolonged bear market and a period where the majority of the market was at paper losses as a leading indicator of an upcoming bull market.
The signal from the DCA indicator chimes nicely with two widely followed indicators tracked by crypto analytics firm Glassnode. 30-day Simple Moving Average (SMA). Bitcoin The real profit-loss ratio (RPLR) indicator at the beginning of the month went above one for the first time since last April. it means that Bitcoin The market is realizing a greater share of profits (denominated in USD) than losses on the sale of BTC (or, when each BTC moves).
According to Glassnode, “this generally indicates that sellers with unrealized losses have been eliminated, and a healthy flow of demand exists to absorb profit-taking”. Therefore, this indicator is sending a bullish signal. Historically, the 30-day SMA of bitcoin RPLR going back above 1 after a long period of time below (such as in November 2015 and April 2019) triggers a huge rally in BTC price.
Similarly, the Adjusted Spent Output Profit Ratio (aSOPR), an indicator that reflects the degree of actual profit and loss for all coins running on-chain, recently surpassed 1, indicating that the market is in profit. . Looking back on the past eight years Bitcoin Historically, aSOPR rising above 1 after being down for a long time has been a great buy signal.
Elsewhere, another market profitability indicator tracked by Cryptoanalytics firm, CryptoQuant, is giving a definite buy signal for the first time since 2019.
Add DCA Indicator To The Laundry List Of Bullish Signals
The DCA indicator is the latest in a growing laundry list of popular on-chain and technical metrics to flash a bullish signal. The above two Glassnode indicators are used by cryptocurrency firm Glassnode in their popular “Bitcoin Recover from Bear” dashboard, which the crypto firm’s analysts use to measure whether bitcoin is about to transition from a bear market to a long-term bull one. may be in process. market.
The dashboard tracks eight indicators to ascertain whether bitcoin is trading above key pricing models, whether network utilization is gaining momentum, whether market profitability is returning, and whether USD-denominated The balance of bitcoin wealth is in favor of long-term HODLers. As discussed in a recent article, seven out of eight Of these indicators, it is currently flashing green and the last eight may be soon. send a bullish signal,
Where Bitcoin is Trading Against Major Pricing Models This year saw BTC rise above its 200-day moving average and realized price, both of which sit below $20,000, indicating a double bullish turn on the technical front. Another recent technical buy signal that has bulls excited is that bitcoin is only experiencing its Seventh “Gold Cross” in the last 10 years. Elsewhere, Number bitcoin wallet addresses having a non-zero balance It recently hit a new all-time high, a sign that a flood of new investors is coming.
Other on-chain indicators tracked by Glassnode such as bitcoin reserve risk, as discussed in recent articleThe MVRV-Z score, which “compares market value and realized value to assess when an asset is over- or undervalued,” is also shouting bull signals. The latter has recently made a sustained recovery above zero after a long period that has historically marked the beginning of a bull market.
Meanwhile, bulls are also taking solace from an analysis of market cycles that the world’s largest cryptocurrency by market capitalization has historically followed. In early January, the crypto-focused Twitter account @CryptoHornHairs identified that bitcoin was trending almost exactly along the path of a four-year market cycle, which has been fully respected for eight years now.
Elsewhere, a widely followed bitcoin pricing model is sending out a similar story. According to the bitcoin stock-to-flow pricing model, the bitcoin market cycle is roughly four years, with prices typically low somewhere near the middle of the four-year interval between “halvings” – bitcoin halvings of four years. Is the event where the mining reward is halved, thus slowing the rate of bitcoin inflation. Past price history suggests that the next big rally for bitcoin will come after the next halving in 2024.
Given all of the above, it should perhaps come as no surprise that bitcoin continues to defy macro headwinds, such as the recent rise in the US dollar and US bond yields driven by the recent hawkish build-up of Fed tightening expectations. . Communication from policy makers after this month’s super strong Tier One US data release.
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