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Anchin’s Analysis: Is Now the Right Time to Buy Bitcoin?

تحلیل آنچین: اکنون زمان مناسبی برای خرید بیت کوین است؟

There are still many unrelated factors that affect the price of Bitcoin. Probably, the effects of the massive sale on August 19 (28 August) on market sentiments, has caused the price of this digital currency to remain below $22,000. However, an examination of a key on-chain indicator suggests that Bitcoin is now likely undervalued far below its true price.

To Report Cointelegraph, Glassnod analysts believe that Bitcoin’s fall from the $25,000 level is the result of increased supply caused by short-term investors selling and part of traders saving profits. This happened after Bitcoin, as a result of a 23-day uptrend, reached levels above Realized price reached ($21,700) and finally faced resistance at the $25,000 level.

Also, they say that the indicators Capital input to exchanges And Outgoing capital from exchanges Both have hit their lowest levels since late 2020 (Fall 2019), a sign of declining public interest in trading.

Chart of incoming capital to exchanges and outgoing capital from bitcoin exchanges
Bitcoin input to exchanges (red indicator) and output from exchanges (green indicator).

Also read: What is On Chain Analysis?

In a more long-term view, the analysis of the recent price movements of Bitcoin shows that the price reduction of this digital currency is simply a return to the quarterly trend of its movement in the range of $18,500 to $22,000. The main factor influencing market sentiments is investor concerns about the economic conditions of the US and the world, which are happening outside of the digital currency market.

Anchin's Analysis: Is Now the Right Time to Buy Bitcoin?
Bitcoin price chart; Long-term price fluctuation between $18,500 and $22,000.

The Jackson Hole economic gathering will begin on August 25 (September 4) with the aim of increasing people’s awareness of the Federal Reserve’s outlook on the US economy. The meeting will discuss issues such as the Fed’s plans to raise interest rates in the future, whether the inflation target will remain at 2 percent and whether the Fed thinks the US and global economy is in recession.

Predictions about this rally have clearly affected investor sentiment, and this anxiety can be clearly seen in the digital currency market, the movements of the S&P500 stock index and the Dow Jones Industrial Average.

Serhii Zhdanov, CEO of EXMO digital currency exchange, says:

There seems to be no single reason for the recent decline in the price of Bitcoin. Global crises continue and it is not clear where the downward trend will end. Inflation forces people to convert their investments into cash to meet daily expenses. Total credit card debt has reached an all-time high in many countries. New data also show that the Covid-19 virus has not yet disappeared, and the increase in geopolitical tensions is also fueling the fall of global markets.

Ethereum goes its own way

The price of ethereum, like bitcoin, saw a correction last week, but the technical analysis of this digital currency shows signs of the beginning of an upward trend. This price correction follows fears of network transaction censorship following the US Office of Foreign Assets Control (OFAC) ban on the Tornado Cash mixer and public concern over the potential results of the move to proof-of-stake, which could further centralize the network. It happens.

Daily ETH/USDT price chart
Ethereum price chart; The formation of a cup and handle pattern in the one-day view of the Ethereum / Tether market.

Positive views of the consolidation update, the formation of a cup and handle pattern on the daily time frame, and the jump from the $1,500 range are enough for many traders to assume that Ethereum price will continue to reach the $2,500-$2,900 range. Also, Ethereum’s price rebound against Bitcoin (ETH/BTC) after hitting the 0.073 level support has made the trading pair very attractive.

The data says that Bitcoin is undervalued

An analyst named “Big Smokey” on Twitter, referring to the upcoming Jackson Hole rally, said that the recent price movements in the stock market and digital currencies clearly show investors’ risk aversion. This risk aversion will continue to form a resistance near Bitcoin’s long-term downtrend line until there is a sufficient trigger to change the trend.

At the moment, the short-term outlook for the price of Bitcoin is not very optimistic. However, Jarvis Labs analyst JJ has pointed out an important on-chain indicator that shows that Bitcoin has reached its price floor (buying range).

According to him, the indexMVRV Z-score» Bitcoin has reached its lowest level below minus 0.042 this week. This number means that investors, on average, are trading their bitcoins at a huge loss. This index had reached this range twice before. The first time was in March 2015, when Bitcoin was trading below $250, and the second time was in February 2019, when Bitcoin reached its price floor of $3,500.

Bitcoin price comparison chart with MVRV index
Bitcoin price comparison chart with MVRV index

But does that mean investors should go and buy all their money in Bitcoin? Probably not. However, as the charts above show, when all the technical indicators have reached their lowest level, Dollar Cost Averaging (DCA) The strategy has been profitable over the past 3 bull markets.

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