crypto strategy

A bullish Bitcoin trend reversal is a far-fetched idea, but this metric screams “buy”

3 minutes read

Bitcoin (BTC) price remains pinned below $22,000 as the lingering impact of the August 19 selloff at $25,200 continues to reverberate across the broader market.

According to analysts at on-chain monitoring resource Glassnode, BTC’s tap at the $25,000 level was followed by “Distribution“, as profit takers and short-term holders sold as price encountered trendline resistance following a 23-day uptrend that saw BTC trading above its realized price ($21,700).

Total Bitcoin inflows and outflows to all exchanges (USD). Source: glassnode

The company also noted that the measure of “total inflows and outflows to all exchanges” shows exchange flows at multi-year lows and returning to “end-2020 levels,” reflecting a “general lack of speculative interest. “.

From a longer-term perspective, Bitcoin’s current price action is simply a continuation of its nearly three-month chop in the $18,500-$22,000 range, but the real drag on sentiment is lingering concerns. non-crypto related in the United States. and the global economy.

On August 25, the Jackson Hole Economic Symposium begins and from there the public will learn about the Federal Reserve’s outlook on the US economy, its plans for future interest rate hikes, whether the inflation target remains at 2% and so the Fed thinks the US and global economy are in recession. The anticipation of the symposium has clearly made investors nervous and those frayed nerves are visible in the S&P 500, DJI and crypto markets this week.

According to Serhii Zhdanov, CEO of cryptocurrency exchange EXMO:

“There seems to be no single factor for the recent decline. Global crises continue, and it is unclear where the bottom is. money to cover day-to-day expenses Total credit card debt in many countries is hitting new highs Recent data shows Covid is not gone and geopolitical tensions are still fueling declining global markets.

Ether marches to the beat of her own drum

Ether (ETH), on the other hand, seems to show some upside promise from a technical analysis perspective. Last week, the asset corrected alongside BTC and suffered some blows related to centralization fears after the Office of Foreign Assets Control, or OFAC, sanctioned Tornado Cash and the crypto community began to fear the potential results of the proof-of-stake transition. network (and its largest ETH players) susceptible to censorship and regulation.

ETH/USDT daily chart. Source: Trading View

Generally, the bullish “meltdown” narrative remains in play and the large cup and handle pattern seen on Ether’s daily timeframe, along with the rebound from the $1500 level is enough to support traders’ dreams. of a rise in the price of ETH into the range of $2,500 to $2,900.

Ether looks equally juicy in its ETH/BTC pair, which bounced off support in the 0.073 BTC range.

On-Chain MVRV Data Indicates Undervalued Bitcoin

As @big_smokey1 mentioned “stocks and crypto [are] clearly risking” with Jackson Hole ahead and in terms of price action, this will likely manifest as continued resistance at Bitcoin’s long-term falling trendline until there is sufficient catalyst to cause a change in trend emerges.

Related: What crashed the crypto relief rally? Find out now on The Market Report

At the moment, Bitcoin’s near-term price outlook is far from bullish, but Jarvis Labs resident analyst “JJ” identified a key on-chain metric that suggests BTC is trading in a generational buy zone.

Price difference from MVRV for BTC. Source: Jarvis Laboratories

According to JJ, Bitcoin’s MVRV (market capitalization versus realized capitalization) indicator is showing an “extremely low” reading.

Does this mean that investors should go out and invest every last penny in BTC? Probably not, but as the MVRV chart above shows, averaging the dollar cost in BTC when its on-chain and technical metrics reach extremely low levels has proven to be a profitable strategy in the past three bull markets.

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.