Will the market reverse? A review of 7 Bitcoin bottom-fishing indicators
Falling into a panic, is the bull market still there?Author: Biteye
What stage is the market in?
Is the market bullish or bearish? Can we still buy the dip?
Panic selling, is the bull market still on?
To better analyze the current trend, Biteye has compiled 7 BTC buy-the-dip indicators.
Helping you assess market sentiment and price fluctuations from multiple angles!
0 1 Ahr999 Index
Current value: 0.6, in the dollar-cost averaging range
Interpretation: The indicator implies the short-term dollar-cost averaging yield of Bitcoin and the deviation of Bitcoin's price from its expected valuation.
0.45 buy-the-dip line, 1.2 dollar-cost averaging line
When AHR999 index < 0.45, the indicator suggests buying the dip
When AHR999 index is between 0.45-1.2, the indicator suggests dollar-cost averaging
When AHR999 index > 1.2, the price is relatively high, and trading is not advisable
Trend review: Since mid-April, this index has been fluctuating around 1.2, and since June, it has completely dropped below 1.2, entering the dollar-cost averaging range. In the past three months, it has been approaching the buy-the-dip line of 0.45.
0 2 Rainbow Chart Indicator (Bitcoin Rainbow Price Chart)
Current value: in a relatively cold market range, suitable for buying
Interpretation: Uses a logarithmic growth curve to predict Bitcoin's potential future price direction. There are a total of 10 color bands, with warmer colors at the top indicating an overheated market, which is a good selling point; cooler colors indicate low market sentiment, which is a better buying point.
Trend review: Since the beginning of this year, Bitcoin's price has mostly been in the cooler color range, indicating that the market is not yet overheated, and recent prices are suitable for buying.
0 3 Relative Strength Index (RSI)
Current value: 58.41, not yet in the buy-the-dip range
Interpretation: The RSI indicator assesses whether the recent trend is bullish or bearish by calculating price changes over a period. The score is evaluated relative to the previous 12 months.
High RSI means the price trend is very positive compared to the previous 12 months
Low RSI means the price movement is very negative compared to the previous 12 months
RSI > 70: Bitcoin is overbought and may soon decline, consider selling
RSI < 30: Bitcoin is oversold and may reverse upwards, consider buying the dip
Trend review: Historically, the RSI indicator has not dropped below 30. When referencing this indicator, one can judge that the closer it is to 30, the more oversold it is, or the closer it is to 70, the more overbought it is.
0 4 2-Year MA Multiplier Indicator
Current value: BTC 57,604, in a price-neutral range
2-Year Moving Average (2YMA): 38,018
2-Year Moving Average x5 (2YMA x5): 190,092
Interpretation: Utilizes the 2-Year Moving Average (green line) and its fivefold product (red line) to highlight periods when buying and selling Bitcoin can yield significant returns.
Price < 2YMA (green line): Price is at a historical low, suitable for buying the dip
Price > 2YMA x5 (red line): Price is at a historical high, suitable for selling at the top
If the price is between the moving averages, it is in a neutral position
Trend review: Currently in a neutral range, it is not yet time to buy the dip thoroughly. From May 2022 to October 2023, this indicator was in the buy-the-dip range.
0 5 Net-Unrealized-Profit-Loss Indicator (NUPL)
Current value: 45.33%, not the best buying range
Interpretation: Assesses market sentiment by calculating the unrealized profits or losses of all Bitcoin holders.
NUPL < 0: Market is in extreme fear of losses, suitable for buying the dip
NUPL 0-0.25: Slight profit area, also suitable for buying
NUPL 0.25-0.5: Transition from bear to bull market, slowly entering a bull market
NUPL 0.5-0.75: Strong bull market sentiment
NUPL 0.75-1: Extreme greed, consider selling at the top
In other words, the further NUPL deviates from 0, the closer the market trend is to the bottom or top.
Trend review: Since January 2023, the market has moved away from the loss zone and gradually into profit. From February to July this year, the RSI was above 0.5, indicating strong bull market sentiment. However, in the past two months, the RSI has dropped to the 0.25-0.5 range, and market sentiment has similarly declined.
0 6 Realized HODL Ratio
Current value: 2689.22, neutral range
Interpretation: Measures market activity and speculation by comparing the number of Bitcoins held over different time periods, such as short-term (within 1 month) and long-term (over 1 year) UTXOs (Unspent Transaction Outputs). A higher value indicates more short-term holders and stronger market speculation; a lower value means a higher proportion of long-term holders, indicating a more stable market.
When approaching the red area, the market is overheated, suitable for taking profits
When approaching the green area, the price is cooler, suitable for buying the dip
Trend review: Since January 2023, the RHODL Ratio has gradually moved away from the green area and is showing an upward trend. In recent months, it has been in a fluctuating downward trend, reflecting a decrease in market heat, but it has not yet fully entered a cooling phase.
0 7 MVRV Indicator (Market Value to Realized Value Ratio)
Current value: 1.83, the market has not entered the bottom range
Interpretation: MVRV is a relative indicator that represents the ratio of circulating market value (Market Cap, MV) to realized market value (Realized Cap, RV), which is the total market value of BTC divided by the market value calculated from the last activity price of BTC, representing the profitability of BTC holders.
MVRV > 3.5: The market is at a top, and holders are significantly profitable, likely to sell
MVRV < 1: The market is at a bottom, most holders are in a loss position, and the willingness to hold exceeds the willingness to sell, increasing the probability of price rise.
Trend review: In the past three to four months, this indicator has been in a downward trend, with holders' profits gradually decreasing. The closer it gets to the bottom range, the easier it is for the market to rebound.
Risk warning: The above is for informational sharing only and is not investment advice. Readers are advised to comply with local laws and regulations.
