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Bitcoin Price Metric Has Reached “Oversold” Zone For 7th Time In 8 Years

A parameter linked to the price of Bitcoin (BTC), which defined BTC ”very obvious“At $ 56,000, it’s now in rare oversold territory.

In a Tweeter Posted on December 6, Philip Swift, creator of the LookIntoBitcoin analytics platform, highlighted potentially bullish signals from Bitcoin’s Advanced NVT signal.

Advanced NVT drops with the price of Bitcoin

Advanced NVT calculates whether Bitcoin is overbought or oversold at a given price using market capitalization and volume on the network.

At the end of November, when BTC / USD had already fallen to $ 56,000, Swift suggested that a recovery was imminent.

Subsequently, the benchmark continued to decline in line with the spot price due to Friday’s liquidation stunt. However, a possible bright side lies in the NVT’s return to the “oversold” zone, which has only happened six times since 2015.

Right now I see a lot of fear in the market which makes me optimistic. Many indicators suggest that we are close to a minimum,” commented.

“The Advanced NVT signal analyzes the price associated with on-chain transactions. It has only had such oversold values ​​a few times in the past, each resulting in a strong rebound. “

Bitcoin Advanced NVT Signal Annotated Chart. Source: Philip Swift / Twitter

However, the force of that rebound may already be exhausted. In recent hours, Bitcoin has resumed consolidation after gaining 6% to $ 51,500 on Bitstamp.

Trade with BTC buyers: wait a week

As of this writing, the $ 51,000 represents a watershed level as commentators suggest the price may suffer further losses in the near future.

Related: Analyst: Bitcoin Could Drive Traders Crazy For Months With $ 53,000 Resistance

Buy between $ 40,000 and $ 45,000. Don’t get trapped, advised trader and analyst Pentoshi to his Twitter followers.

“There is a possibility that BTC will come back towards $ 52,000 in the near term, but I believe that by waiting a few days / weeks you will avoid the turmoil. Buy between $ 40,000 and $ 45,000. Don’t get caught up. At the moment, I don’t see a good reason to open any new longs here. I will wait for a new opportunity to present itself. “

As Cointelegraph reported on Monday, there are many reasons to separate the price action in the spot market from the underlying strength of Bitcoin.

These include the hash rate at a new all-time high, as well as a general lack of sales. Smaller HODLers, on the other hand, have spent the last few days adding more BTC to their positions.

It appears that only whales protect their bets, as evidenced by data on trade flows.