A Bitcoin (BTC) price metric that used to make BTC “look really cheap” at $ 56,000 is now in rare oversold territory.
In a December 6 tweet, Philip Swift, Philip Swift, creator of the LookIntoBitcoin analytics platform, reflected on potentially bullish signals from Bitcoin’s forward NVT signal.
Advanced NVT deflates in Bitcoin price rout
Advanced NVT calculates whether Bitcoin is overbought or oversold at a certain price using market capitalization and network volume.
In late November, when BTC / USD had already fallen to $ 56,000, Swift suggested a rebound was due.
The metric then continued to align with the spot price thanks to last Friday’s liquidation stunt. One possible benefit, however, is the return of “oversold” clues from NVT – something that has only happened six times since 2015.
“A lot of fear in the market right now, which makes me optimistic. There are a lot of indicators that suggest we are near a bottom,” he said.
“Advanced NVT Signal examines the price versus on-chain transactions. This has only been oversold a few times before, resulting in a strong rebound each time. “
Annotated Bitcoin Advanced NVT Signal Chart. Source: Philip Swift / Twitter
The strength of such a rebound may have faded already, however, with Bitcoin reversing after around 6% overnight gains to $ 51,500 on Bitstamp.
From trader to BTC buyers: wait a week to ‘avoid cutting’
At the time of going to press, $ 51,000 was the center of attention, amid strong indications from commentators that a further decline could soon enter.
“Buy in the 1940s. Don’t get tricked,” trader and analyst Pentoshi advised Twitter followers.
As Cointelegraph reported on Monday, there are many reasons to separate the spot price action from the underlying strength of Bitcoin.
Among them is a record hash rate, as well as a large lack of selling – small hodlers, on the other hand, have increased their positions throughout the past week.
Only whales seem to be hedging their bets, as evidenced by trade flow data.