3 metrics contrarian crypto investors use to know when to buy Bitcoin

3 metrics contrarian crypto investors use to know when to buy Bitcoin

Bitcoin has been one of the most volatile cryptocurrencies in recent years, with a wide range of price trends. However, it is still extremely popular and many people are looking for signals that can tell them when to buy or sell Bitcoin. Here we explore 3 metrics contrarian crypto investors use to know when they should trade their Bitcoins.

Register now on Binance, add 50$ and get 100$ bonus voucher!

The “best crypto metrics” are three metrics that contrarian investors use to know when to buy Bitcoin. The first metric is the amount of money raised in ICOs, the second metric is the amount of people on Telegram, and the third metric is the number of new ICOs.

3 metrics contrarian crypto investors use to know when to buy Bitcoin

It’s easier said than done to buy cheap and sell high, particularly when emotion and turbulent markets are involved. The greatest prices have historically been discovered when there is “blood on the streets,” but the risk of catching a falling knife keeps most investors on the sidelines.

Bitcoin (BTC) fell to a low of $26,782 in May, and some experts are now forecasting a BTC price below $20,000. When panic is running wild, the contrarian investor attempts to create positions in attractive assets before the larger market regains its composure.

Here are a few signs that contrarian investors may use to identify the best times to enter positions ahead of the next marketwide surge.

The Crypto Fear & Greed Index

The Crypto Fear & Greed index is a well-known measure of market sentiment that most investors use to crowd-forecast the near future of the market. If viewed purely at face value, an “extreme fear” reading, such as the current sentiment, is meant to signal to stay out of the market and preserve capital.

3 metrics contrarian crypto investors use to know when to buy BitcoinCrypto Fear & Greed Index. Source: Alternative

Analysts at cryptocurrency intelligence startup Jarvis Labs point out that the index might be used as a market signal.

An increase in price is one of the most important aspects that may aid the index’s ascent. Jarvis Labs put the notion of purchasing when the index drops below a set level and selling when it hits a predefined high to the test.

The low threshold for this test was set at 10, while the sell points were set at 35, 50, and 65.

3 metrics contrarian crypto investors use to know when to buy BitcoinFear & Greed returns for BTC. Source: Jarvis Labs

Register now on Binance, add 50$ and get 100$ bonus voucher!

The shorter time-frame option of selling whenever the index crossed 35, as illustrated by the yellow line in the chart above, produced the greatest returns when this approach was backtested. This strategy yielded a 14.6 percent yearly average return and a total return of 133.4 percent.

The index topped 10 on May 10 and remained at that level for six of the next 17 days, with the lowest score of 8 occurring on May 17.

While it’s conceivable that the market may continue to fall in the short term, history suggests that both the price and the index will ultimately climb above their current levels, providing contrarian traders with a potential investment opportunity.

The collection of whale wallets

Another indication that indicates when purchasing chances exist is following Bitcoin whale wallets with a balance of 10,000 BTC or more.

3 metrics contrarian crypto investors use to know when to buy BitcoinNumber of Bitcoin addresses having at least 10,000 BTC in their balance. Glassnode is the source of this information.

While the market has been declining over the last three months, the number of wallets holding at least 10,000 BTC has been increasing.

3 metrics contrarian crypto investors use to know when to buy BitcoinNumber of Bitcoin addresses having at least 10,000 BTC in their balance. Glassnode is the source of this information.

The number of large whale wallets has now reached its greatest level since February 2021, when Bitcoin was trading over $57,000 and these wallets were selling into strength around the market peak.

While many commentators on Crypto Twitter are predicting a further 30% decrease in the price of Bitcoin, whale wallets are banking on a bright future.

Related: 3 reasons why Bitcoin is regaining market dominance in the cryptocurrency space

When the price of Bitcoin falls below its cost of production, some traders buy.

The average mining cost of Bitcoin, which is the amount of money it takes a miner to mine 1 BTC, is another measure that might help you decide when and where to purchase.

3 metrics contrarian crypto investors use to know when to buy BitcoinThe average cost of Bitcoin mining. MacroMicro is the source of this information.

Since 2017, the price of Bitcoin has traded at or above the cost of production for the vast majority of the time, demonstrating that the measure is a solid predictor of when generational buying opportunities exist, as seen in the chart above.

A deeper examination of the current data reveals that the average mining cost is $27,644, or $2,000 less than where BTC is now trading.

3 metrics contrarian crypto investors use to know when to buy BitcoinThe average cost of Bitcoin mining. MacroMicro is the source of this information.

Further research reveals that in the past, when the market price of BTC dipped below the average mining cost, it tended to remain within 10% of the cost to mine and typically regained parity within a few months.

The difficulty of mining bitcoin has reached a new all-time high, and the price is continuing to rise as more industrial-scale mining rigs come online. This indicates that the average cost of mining is unlikely to fall much very soon.

Taken together, the current cost of mining vs the market price of BTC makes a persuasive argument for the contrarian investor that the market’s widespread concern provides a chance to be greedy while others are scared.

Do you want to learn more about trading and investing in the crypto markets?

The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.

The “key crypto metrics” are 3 metrics that contrarian investors use to know when to buy Bitcoin. They are the number of active addresses, the number of transactions and the percentage of mining power.

  • bitcoin price
  • what happened to bitcoin today
  • bitcoin price prediction
  • why bitcoin is falling down today
  • bitcoin price usd

Register now on Binance, add 50$ and get 100$ bonus voucher!

More Stories
Bitcoin ‘kisses’ $24K realized price after 2nd highest seller losses in history