A Bitcoin (BTC) price metric which made BTC “look seriously cheap” at $56,000 is now in rare oversold territory.
In a tweet on Dec. 6, Philip Swift, Philip Swift, creator of analytics platform LookIntoBitcoin, returned to potentially bullish signals coming from Bitcoin’s Advanced NVT Signal.
Advanced NVT deflates in Bitcoin price rout
Advanced NVT calculates whether Bitcoin is overbought or oversold at a certain price point using market capitalization and network volume.
In late November, when BTC/USD had already fallen to $56,000, Swift suggested that a bounce was due.
The metric subsequently continued to fall in line with spot price thanks to last Friday’s liquidation cascade. A possible plus, however, lies in the return of “oversold” cues from NVT — something which has only occurred six times since 2015.
“A lot of fear in the market currently, which makes me bullish. Lots of indicators suggest we are near a bottom,” he said.
“Advanced NVT Signal looks at price relative to onchain transactions. It has only been this oversold a few times before, each time resulting in a strong bounce.”
The strength of such a bounce nonetheless may have already faded, with Bitcoin reversing after around 6% overnight gains to $51,500 on Bitstamp.
Trader to BTC buyers: Wait a week to “avoid chop”
At press time, $51,000 formed a focus, amid heavy indications from commentators that fresh downside could soon enter.
Related: Bitcoin could ‘drive people nuts’ for months with $53K BTC price ceiling — analyst
“Buy in low to mid 40’s. Not get trapped,” trader and analyst Pentoshi advised Twitter followers.
I can see $BTC short term trading back towards 52k but I think if you wait a few days/week you’ll avoid chop. Buy in low to mid 40’s. Not get trapped. Don’t see a reason to take new longs here atm. Going to wait for a new trade to come to me pic.twitter.com/NS7J0PainD
— Pentoshi (@Pentosh1) December 6, 2021
As Cointelegraph reported Monday, meanwhile, there are plenty of reasons to separate spot price action from underlying strength in Bitcoin.
Among them is all-time high hash rate, along with a broad lack of selling — smaller hodlers, by contrast, have been adding to their positions throughout the past week.
Only whales appear to be hedging their bets, as evidenced by exchange flow data.
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ARTICLE: This Bitcoin price metric just hit 'oversold' for only the 7th time in 8 years
PUBLISHED: 2021-12-07 08:39:23