3 measures used by reverse cryptocurrency investors to know when to buy Bitcoin

3 measures used by reverse cryptocurrency investors to know when to buy Bitcoin – Mail Bonus

Buying low and selling high is easier said than done, especially when emotions and volatile markets are thrown into the mix. Historically, the best deals are when there is “blood on the streets,” but the risk of catching a falling knife usually keeps most investors on the sidelines.

The month of May has been particularly challenging for cryptocurrency holders as Bitcoin (BTC) dropped to $ 26,782 and some analysts now predict below $ 20,000 BTC prices in the near future. There are times like these when the fear prevails that the opposite investor seeks to establish a position in a promising asset before the wider market is delivered.

Here are some suggestions on how to look or get an appointment for antique investments.

The Crypto Fear & Greed Index

The Crypto Fear & Greed index is a well-known measure of market sentiment that most investors use to predict the near future of the market. If viewed only at face value, “fearful reading”, like current beliefs, is meant to indicate a stay away from the market and a wealth of resources.

Crypto Fear & Greed Index. Source: Alternative

The index can actually be used as a market indicator, a point that experts at the secret service company Jarvis Labs have pointed out.

One of the biggest factors that can contribute to the rise in the index is the rise in prices. Jarvis Labs tested the idea of ​​buying when the index falls below a certain threshold and then selling when it reaches a pre-determined maximum.

For this test, an index score of 10 was chosen for the low threshold, while grades 35, 50 and 65 were selected as selling points.

Fear and greed return to BTC. Source: Jarvis Labs

When this method was retested, the results showed that the shorter time frame option to sell when the index exceeded 35, as indicated by the yellow line in the figure above, gave the best results. This method gave a 14.6% annual average return and a cumulative return of 133.4%.

On May 10, the index hit 10 and continued to record a score of 10 or lower in six of the following 17 days, while the lowest score of 8 occurred on May 17.

While it is possible that the market will continue to decline in the near future, history suggests that both prices and the index will eventually rise above current levels, offering a potential investment opportunity for opposite traders.

Accumulation of whale wallets

Following a Bitcoin whale wallet with a balance of 10,000 BTC or more is another indicator that indicates when buying opportunities arise.

Number of Bitcoin addresses with a balance of at least 10,000 BTC. Source: Glassnode

A closer look at the last three months shows that while the market has been selling, the number of wallets containing at least 10,000 BTC has been rising.

Number of Bitcoin addresses with a balance of at least 10,000 BTC. Source: Glassnode

The number of whale wallets of this size is now at its highest level since February 2021, when Bitcoin was trading at over $ 57,000, and these wallets were selling at a strength close to the market peak.

While many experts on Crypto Twitter are demanding another 30 plus percent reduction in BTC prices, whale wallets are betting on a positive future.

Connected: 3 reasons why Bitcoin is regaining its cryptocurrency market dominance

Some traders buy when Bitcoin prices fall below production costs

Another measure that can provide insight into when and where to buy is the average cost of learning Bitcoin, which is the amount it costs a miner to earn 1 BTC.

Bitcoin average tuition costs. Source: MacroMicro

As shown in the chart above, the price of Bitcoin has traded at or above production costs for most of the time since 2017, indicating that the measure is a good indicator of when generational buying opportunities will be created.

A closer look at the current reading shows that the average tuition fee is $ 27,644, about $ 2,000 below where BTC is trading at the time of writing.

Bitcoin average tuition costs. Source: MacroMicro

Further analysis shows that in previous cases where the market price of BTC fell below the average cost of education, it tended to be within 10% of the cost of mining and generally managed to regain balance within a few months.

Bitcoin mining difficulties also recently reached a new historic high and the market continues to see a boom as industrial-scale mining comes online. This means that it is unlikely that the average cost of mine will decrease significantly in the near future.

All in all, the current cost of mining compared to the market price of BTC shows a convincing argument for the opposite investor that the widespread fear that prevails in the market provides an opportunity to be greedy when others are scared.

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