So Bitcoin’s been falling and you’ve been HODLing because you like to think you’re a clever degen, right? And you want some of that fabled 61,334% gain the OGs have been boasting about.
But since that delicious all-time high of $69k in November, BTC dropped 40% and it’s getting a bit scary. So you’re thinking to yourself: “Is the bottom close enough? Is it safe to slowly start buying some altcoins?”
Fear not, Banter Fam, we’ve got you covered. Read on for some peace of mind – and a reminder to keep your dry powder ready to buy the bottom. Because it’s coming.
We doubt if there ever has been a time when BTC moved sideways for a whole month, and still, people are extremely bullish on it. But then, why wouldn’t they be? The bottom is pretty close – here are 5 indicators to help strengthen your hand.
- On-chain metric are bullish
- Fear and Greed Index shows EXTREME FEAR
- BTC strength despite stock market doom and US10Y
- Who was buying the dip? Whales, duh!
On-chain metrics and what they suggest
For any commodity or asset, supply and demand are the top factors that affect its price. We know the total supply of Bitcoin is fixed at 21 million, and institutional demand is undeniable.
On-chain data plays a crucial role in helping traders to identify the bottom.
Glassnode data suggests that long-term holders aren’t touching their Bitcoin wallets. Since October 2021, the number of frozen wallets has been increasing. So a big chunk of supply is not available on the market, and day by day, even more Bitcoiners are joining this list. A supply shock is coming for Bitcoin sooner or later.
Ran frequently talks about funding rates and leverage ratio on the show. Right now, BTC’s extreme leverage ratio is not a healthy indicator. At all. CryptoQuant analyst Minkyu Woo confirms this in his latest tweet.
This supports our theory that we’re close to the Bitcoin bottom, and helps us connect the dots. There is a pattern that connects price, leverage, and funding rates.
It works like this: Whenever leverage is up and funding is down, the market moves sideways, as it is doing now. And when the funding rate is up and leverage is down, Bitcoin does what it does best: it pumps!
Right now, we are very close to flipping the leverage ratio down. Which will be when we BTFB, obvs.
In December 2020, the market experienced the funding rates up phenomenon, and we went all the way from US$17k to US$64k!
And doesn’t the BTC price fractal from US$69K to US$40K look a bit familiar? Maybe like the US$3k bottom of 2019?
And did we mention that the Short Term Holder profit is at June 2021 and March 2020 levels? Each time this pattern has been seen, we’ve had recoveries and new ATHs. This means sellers are getting exhausted!
Moreover, at least one indicator is flashing a strong buy signal. The Bitcoin entity-adjusted dormancy flow indicator has dipped into the green zone. Historically this has been a good buy zone for Bitcoin, and it further strengthens our Bitcoin bottom theory.
But does the Bitcoin buy signal tell us to buy Bitcoin itself? Not necessarily. The best way to make multifold gains is to Dollar Cost Average (DCA) into strong coins. Most of the crypto sphere will follow daddy Bitcoin. So get into strong altcoins, when the Bitcoin bottom is ready to pop.
The Fear and Greed Index and social sentiment
But what about social sentiment? For the last two weeks, the Fear And Greed Index has been below 24. Right inside the Fear and Extreme Fear territories. Historically, these territories are good buying opportunities for Bitcoin. (The last time the index remained at Fear levels for this long was May 2021…need we say more?).
Bitcoin showing strength despite stock market doom
The stock market took a beating today (19 January 2022) with S&P losing 85 points.
Yet Bitcoin held strong throughout the day compared to the stock market.
Also, Bitcoin correlates incredibly closely with the Shanghai Composite since 2016, which just happens to be moving forward, despite other market conditions.
That said, keep an eye on the Ukraine situation. The market might react, so be ready for any short-term price volatility.
Something else that supports the macro price action is the divergence between BTC and the 10-year yield. Historically, most divergences, together with the on-chain data we’ve mentioned, have led to a bullish movement.
Who’s buying the dip?
On 10 January 2022, Bitcoin had a wick below $40k. But the dip was bought quickly, forming an amazing volume candle.
Retailers can’t buy with such volume and absorb the supply – there must be some other mechanism at play. Yip, the whales, as the Bitcoin Archive points to strong hands behind the supply running out.
Likewise, the whales have been buying since October 2021. Unlike previous corrections, where we saw massive miner outflows to exchanges, this BTC correction itself (the dip) had nothing to do with the whales. They simply used it to their advantage to buy more BTC, hence that wick candling so quickly.
Sooner or later, the ongoing fear in the market will reverse, and we will be back chasing new all-time highs! Why not buy at the bottom and utilize an Extreme Fear environment to kick off your DCA strategy?
Who cares whether the Bitcoin is at US$42k or US$40K? Especially when you see the bigger picture. If Bitcoin runs, the alts follow. We know that they have been primed for a mega move, for weeks, with some altcoins not even waiting for Bitcoin to make their parabolic moves.
One thing is certain: whales are accumulating, and institutions are buying Bitcoin like there’s no tomorrow. Even on-chain data suggests that we might be at the bottom range.
Strong hands and long-term holders remain unfazed too. The Fear And Greed Index is in Extreme Fear, we know. But do you remember last June, when BTC just kissed $28k levels and flew? You remember, don’t you, that the index was also at Extreme Fear levels then?
So, you can choose to be the better Bob, who does not chase pumps,and rather waits for them with his cool glasses on. Cheers Banter Fam!