Bitcoin (BTC), a price metric that made Bitcoin “look seriously cheap” at $56,000, is now rarely oversold.
Philip Swift, creator and founder of analytics platform LookIntoBitcoin tweeted Dec. 6 that he had returned to potential bullish signals from Bitcoin’s Advanced NVT signal.
Bitcoin price rout: dvanced NVT is deflated
Advanced NVT uses market capitalization and network volumes to calculate whether Bitcoin is either overbought, or undersold at a given price point.
Swift suggested in November that there was a rebound, as the BTC/USD had fallen to $56,000 by late November.
The spot price fell in line with the metric’s fall after Friday’s liquidation cascade. The return of NVT “oversold” cues — which have only been seen six times since 2015 — is a potential plus.
“There is a lot of fear in this market right now, which makes me bullish. He said that there are many indicators that indicate we are close to a bottom.
Advanced NVT Signal compares price to onchain transactions. It has only been this high-priced a few times, with each instance resulting in strong bounces.
Bitcoin advanced NVT sign annotated chart. Source: Philip Swift/Twitter
However, the strength of such a bounce may have already diminished with Bitcoin losing around 6% overnight to $51,500 on Bitstamp.
BTC buyers to Trader: Give it a week before you “avoid chop”.
As of press time, $51,000 was the focus. However, there were strong indications from commentators suggesting that a new downside could soon emerge.
Related: Bitcoin could drive people crazy for months, with a $53K BTC price ceiling — Analyst
“Buy in the low- to mid-40’s. Pentoshi, a trader and analyst, advised followers to not get trapped.
Although I can see $BTC short-term trading returning towards 52k, I believe if you wait a few more days/week, you will avoid chop. You should buy in the low to mid 40’s. Not get trapped. I don’t see any reason to start new longs right now. Going to wait for a new trade to come to me pic.twitter.com/NS7J0PainD
— Pentoshi (@Pentosh1) December 6, 2021
Cointelegraph reported Monday that there are many reasons to distinguish spot price action and underlying strength of Bitcoin.
They include an all-time high hashrate and a general lack of selling. Smaller hodlers on the other hand have been increasing their positions over the past week.
As evidenced by data on exchange flows, only whales seem to hedge their bets.