A simple method for purchasing and selling Bitcoin has been revealed by an analyst. It involves using two BTC chain indicators to follow a historical pattern.
These Bitcoin On Chain Indicators have historically followed a certain pattern
The aforementioned is a post Axel Adler Jr. of CryptoQuant, an author on X presented a simple method for determining the best time to buy and sell Bitcoin. This strategy relies on historical trends in BTC metrics such as Net Unrealized Gain (NUP) and Net Realized Loss.
These indicators, as their name suggests, keep track of how much unrealized loss or unrealized gain the investor is currently holding.
This metric is a good way to measure the effectiveness of your metrics. work You can find the current price of a coin by looking through its transaction history. If you assume that each coin has changed hands only once, then the current price would be the one at which it was last transacted. cost basis.
If the coin’s previous spot price is less than current cryptocurrency price, the coin currently has a profit. To calculate the unrealized profit for a coin, the NUP subtracts both.
The NUL calculates the value for any coins whose base cost is higher than the current asset’s price. The indicators sum this total value and divide it by the market capitalization.
First, let’s look at a chart from the NUL analyst that shows the pattern the NUL metric has followed throughout Bitcoin history:
Source| Source: @AxelAdlerJr on X
Bitcoin NUL seems to have consistently broken above the 0.5% level, when the asset has traded at around bear market lows. Axel believes that the best indicator for this area would be to purchase more.
This means that the investor’s unrealized losses are being kept. It makes sense because the crypto has been a success. new all-time highs (ATHs). When an ATH has been set, the entire supply is profited.
The NUP, which has a similar pattern to that of the NUL in past major tops, is above the level of 0.7. This suggests it could be an opportunity to sell if the indicator is within this range.
Source| Source: @AxelAdlerJr on X
The NUP is marching upwards with Bitcoin’s recent rally, as can be seen in the graph. However, as of yet, the indicator still hasn’t breached the crucial 0.7 mark, suggesting that it is not too hot to sell, according this strategy.
Both indicators failed to accurately predict the top or bottom of an asset. The NUP shows this most clearly, as the indicator is a strong signal. “sell” Tops were only halfway through their bull run.
Historically, it would have been more profitable to buy at NUL points and sell when the NUP value was overheated. It would make sense in this context. “simple” Strategy for an asset
The current Bitcoin cycle will also be interesting to see if these patterns continue.
BTC Price
Bitcoin was trading around $69400 at the time this article was written, down by 2% in the last 24 hours.
Source| Source: BTCUSD on TradingView
Chart from TradingView.com. Image from Kanchanara at Unsplash.com.
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