After months of sluggish movement, Bitcoin’s [BTC] price rally last week saw many traders light up. However, not everyone cheered with optimism with veteran trader Tone Vays advising caution in the face of BTC’s $5,000 ascendance.
In a recent tweet, Vays emphasized that there is “NO magic price,” while analyzing Bitcoin’s bottom and the market’s swerve from the bears to the bulls, as many might argue. He suggested that it was more important as to how Bitcoin “gets to a price,” rather than the price itself.
Highlighting the means rather than the ends, Vays argued that the trend of Bitcoin and the overarching market should be the focus rather than the ascendance to a price or the breaking of a resistance level. Mere price surges are inconsequential in the market if there isn’t a fundamental, market-changing reason for the same.
Vays also delved into two separate scenarios that could arise, if the price pump continued. The first would see Bitcoin reaching $8,000, while bottoming at $3,000. Given the tidings of the market, this scenario can play out as many analysts agree that BTC bottomed at $3,000.
The second scenario is if Bitcoin reaches $10,000, without having “bottomed.” The trend to the $8,000 or $10,000 mark is more important than the mere breach of the mark. Consistent movement will build confidence, while random spurts will only add to the volatility and build doubt in the industry.
His full tweet read,
“There is NO magic price that turns a bear trend to a bull trend, it’s about how $BTCUSD gets to a price. I can see a scenario where I say:
“I was wrong, #Bitcoin did bottom at $3k, now that we are at $8k”
But I can also say:
“I know $BTC is $10k, but I don’t think we bottomed”
Bitcoin’s 1 April swing saw the king coin surge by over 17 percent in less than a day, marking its highest daily gain for over a year. In just one day, the coin managed to add over 40 percent against its price in December 2018, which many say was the peak of the crypto-winter.
The collective market added over $40 billion over the past week, with Bitcoin’s dominance rising to a three-month high of 52.4 percent when the price rally was at its peak.
Many analysts have touted other levels that need to be breached before a bull run can be announced. Mati Greenspan, a senior market analyst at eToro, pegged this level at $5,350, which if broken, will signal an uptrend.
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Bitcoin’s on-chain/off-chain valuation indicators the key point of focus as coin heads to $13,000
With the rise in Bitcoin’s price, the rest of the cryptocurrency market has followed suit by displaying a green trend across the board. In a recent series of tweets by popular cryptocurrency analyst Adam Tache, users were informed about the top Bitcoin on-chain and off-chain valuation indicators, derived from on-chain valuation models.
The analysis touched on the Mayer Multiple created by dividing the price by the all-important – 200 day moving average. The current average Mayer Multiple stands at a figure of 1.39, which may climb higher. Looking at previous figures, the normal Mayer Multiple figures stated that if the value shoots up to 2.4, then Bitcoin eventually retraces back to a comfortable 1.5. The Mayer Multiple is usually considered as the original indicator used to clock the valuation of Bitcoin.
Another major indicator discussed in the thread was the NVT Ratio invented by Willy Woo, Partner at Adaptive Fund. The indicator is used to calculate Bitcoin’s prominence or value in the cryptocurrency space by evaluating the amount transacted on the blockchain as a “proxy for investment flow and bear and bull market cycles.”
At the moment, the NVT ratio for Bitcoin is in an abnormal region compared to the start of previous bullish patterns. The NVT ratio was above the “bear market” separator, which meant that the cryptocurrency was overbought. When Bitcoin is overbought, it usually means that the buying pressure is much higher than the selling pressure. Adam Tache opined,
“NVT signaling overbought is likely due to a number of factors — namely the proliferation of exchange-based, purely off-chain txs driving short-term price action.”
The analysis also pointed out the liveliness of the Bitcoin indicator created by Tamas Blummer. The indicator showed the inverse count of lost or ‘HODLed’ Bitcoin, while stating that when the ratio increases, long-terms holders of the cryptocurrency decrease their positions. The indicator conveyed accumulation of Bitcoin when the ratio decreased.
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