This classic Bitcoin metric is flashing buy for first time since March 2020

To determine if Bitcoin (BTC), the bottom has been reached, bulls might only need to look at a pair simple moving averages (SMAs).

Checkmate, the lead on-chain analyst for crypto analytics firm Glassnode flagged the Investor Tool indicator hitting “buy the dip.” in a Twitter thread.

Bitcoin’s Investor Tool enters the “Generational Zone”

The Investor Tool is a simple but effective BTC price metric that shows the potential for buyers of Bitcoin to earn “outsized” returns.

Philip Swift, founder of LookIntoBitcoin, created it to determine when BTC/USD might be overbought or undersold.

This metric uses the SMA for two years and its 5x multiplier. These lines are plotted against spot prices and have historically been successful at catching both generational tops or bottoms.

Now, Bitcoin/USD is below its two-year SMA. It crossed that line just one week before the Terra LUNA (now Luna Classic) debacle, which sent Bitcoin to ten month lows.

Checkmate stated that “Bitcoin Simple Moving Averages provide edge when navigating bear market markets,” and added that it had “entered a generational zone.”

Chart for Bitcoin Investor Tool. Source: Glassnode

Hayes is “more confident” about $25,000 bottom after LFG BTC sale

Although Bitcoin bulls may not be out of the woods at $30,000 however, the Investor Tool’s readings reinforce a narrative that is just beginning to emerge among analysts.

Related: The $32K Bitcoin price could change the tides at Friday’s $160M BTC options expiry

Cointelegraph reported that Arthur Hayes (ex-CEO of BitMEX derivatives giant BitMEX) suggested this week that May’s Terra-inspired trip up to $23,800 might actually be a long-term BTC price ceiling.

Although there are many predictions of a crash as low as $14,000, historical patterns could still play a part in securing Bitcoin at current levels.

Hayes suggested that even the Terra episode in which the Luna Foundation Guard (LFG), a nonprofit, liquidated 80,000 BTC could have cemented support.

“At the bottom, an often impervious stronghand can be forced to buy because of uneconomical arrangements festering within their trading books. This is the LFG. He explained that it was quite difficult to generate 80,000 bitcoins physically.

“After considering the nature of these Bitcoins being sold, I feel even more certain that the $25,000- $27,000 zone for Bitcoin represents the bottom of this cycle.” You should do your research before making any investment or trading decision.

https://cointelegraph.com/news/this-classic-bitcoin-metric-is-flashing-buy-for-first-time-since-march-2020