5 tips that traders can use to know when the cryptocurrency market is coming to an end

5 tips that traders can use to know when the cryptocurrency market is coming to an end – Mail Bonus

The cattle market has disappeared and the reality of a long cryptic winter is definitely giving traders a bad case of chills. Bitcoin (BTC) prices have fallen to a low, not even the bears expected, and some investors are probably scratching their heads and wondering how BTC will come back from this epic decline.

Prices fall daily and the question that comes to everyone’s mind is: “When will the market bottom out and how long will the bear market last?”

Although it is impossible to predict when the bear market will end, a study of the previous downstream provides some insight into when the phase will end.

Here are five tips that traders can use to know when a cryptocurrency winter is coming to an end.

The cryptocurrency industry is starting to recover

One of the classic signs that a cryptic winter has begun is widespread redundancies across the cryptocurrency system as companies seek to cut spending to survive the lean times ahead.

News headlines throughout 2018 and 2019 were full of redundancy announcements from key players in the industry, including technology companies such as ConsenSys and Bitmain, as well as cryptocurrencies such as Huobi and Coinfloor.

Recent outbreaks of redundancies, such as an 18% reduction in staff for Coinbase and a 10% cut in Gemini, are a cause for concern, and given the current bear market launch, redundancies are likely to rise. This means that it is probably too early to refer to this measure as proof that the bear market is declining.

A good sign that cryptocurrency is approaching is when companies start hiring again and new projects begin with interesting financing announcements. These are indications that money has begun to flow back into the ecosystem and the worst in the bear market is in the past.

Stay tuned to see if the 200-week SMA Bitcoin will be resistance or support

A technological development that has repeatedly signaled the end of a bearish period in the history of Bitcoin is when the price falls below the 200-week simple moving average (SMA) and then climbs up again before that.

BTC / USD 1-week chart. Source: Twitter

As shown in regions identified with purple arrows on the table above, previous cases where the price of BTC dipped below the 200-week SMA, the light blue line, and then climbed back above the benchmark before rising in the market.

A solid BTC recovery again over the implemented price, which is the combined purchase price of all Bitcoins and is represented by the green line in the chart above, can also be used as an additional confirmation that the market development could also be becoming positive.

RSI is king in calling the bottom

Another technical indicator that can provide insight into when the bear market may be in a slump is the relative strength index (RSI).

Specifically, previous bear markets have seen the Bitcoin RSI fall into a sell-off zone and fall below a rating of 16 by the time BTC reached its low.

BTC / USDT 1-day chart. Source: TradingView

Based on the two cases highlighted above in orange circles, the confirmation comes that the low is not until the RSI climbs above 70 again into the overbought area, indicating that an increase in demand has returned to the market.

Market value at real value

Market value at fair value (MVRV) Z-level is a measure designed to “identify periods when Bitcoin is highly overvalued or undervalued relative to” fair value “.

MVRV Z-score. Source: LookIntoBitcoin

The blue line in the image above shows the current market value of Bitcoin, the orange line represents the real price and the red line represents the Z-level, which is a “standard deviation test that pulls out data extremes between market value and implemented value.”

As can be seen in the figure, previous bear markets coincided with a Z-score below 0.1, which is indicated by a green box at the bottom. The start of a new increase was not confirmed until the measured value returned above the score of 0.1.

Based on historical performance, this measure suggests that there may be even more highs in the near future for Bitcoin, followed by long-term side-pricing measures.

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2-year moving average multiplier

A final measure that can provide a simplified way for Bitcoin investors to know when the bear market is over is a 2-year moving average multiplier. This measure monitors the 2-year moving average and 5x multiplication of the 2-year moving average (MA) by the price of Bitcoin.

Bitcoin investor tool: 2 year MA multiplier. Source: LookIntoBitcoin

Whenever the price of BTC fell below the 2 year MA, the market entered a bear market area. When the price climbed back up before 2 years of MA, an upturn would follow.

On the other hand, the price that climbed above the 2-year MA x5 line gave the signal of a full beef market and gave a convenient time to make a profit.

Traders can use this measure as a sign of when it might be a good time for accumulation, as indicated by green shaded areas, or they can wait until the price of BTC clears 2-year as a sign that the bear market is over.

Whether a trader chooses to apply the indicators described above, it is important to remember that no indicator is perfect and there is always the risk of more disadvantages.

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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.