Original author: 1912212.eth, Foresight News
The one who knows how to buy is just the apprentice, the one who knows how to sell is the master, which fully explains the mystery of the market. Imagine that when the position you bought brings profits at the beginning, and then continues to soar, the floating profit is huge, and you are full of joy. You think that it will reach your psychological price and that the next madness is about to come.
As a result, the market came to a sudden halt. At this time, you thought it was just a consolidation and fluctuation. Not long after, it fell again, and the profit was lost by half.
You are too reluctant to sell, afraid of selling at a loss. You don't sell, but hold on. As a result, the cruel lesson of the market finally comes, and it starts to fall below the cost price. You think it has bottomed out, but it falls by 30%. You choose to buy at the bottom again, but it falls by another 20%. At this point, you are seriously trapped and have no money left. Just after you reluctantly sell at a loss, it is exactly the bottom range of the market, and the market begins to slowly climb.
Not being able to take profits will lead to a significant profit drawdown, or even end up with a loss. Every novice entering the market must have experienced this, and even some veterans cannot escape the curse of market sentiment.
This article will focus on the interpretation of the top-escape selling indicators. It is hoped that readers will better grasp the selling opportunities under the overall market conditions after digesting and understanding them.
Coinbase tops the U.S. Apple APP free list
As a compliant exchange in the United States, Coinbase not only has considerable influence in listing coins, but the popularity of its APP downloads can also be used to observe the overall market heat and sentiment indicators.
During the last bull market cycle, Coinbase entered the TOP 100 of the Apple App Store’s free list after November 2020, and then entered the TOP 30 in January 2021, which even caused technical problems at one point.
Interestingly, nine months later, on October 28, 2021, Coinbase ranked No. 1 on the free list. At that time, the BTC price was around $60,000, only 10 days away from the peak of $69,000 reached on November 8.
When users flocked to download Coinbase to buy coins, the top features were already obvious.
BTC monthly chart fails to break 7 consecutive gains
From the historical charts, we can see that in a complete bull market cycle, there is only one major rise in BTC.
In the last cycle, from October 2020 to March 2021, the monthly line rose for 6 consecutive times. In this cycle, benefiting from the approval of spot ETFs, BTC has achieved a rare 7 consecutive monthly rises.
After that, it began to consolidate. In this bull market, since its price is already above 60,000 US dollars, it will be very difficult to achieve the miracle of 7 consecutive increases in the second half of this bull market.
BTC Unrealized Net Profit/Loss
This indicator is mainly used to measure the profit/loss of players on the Bitcoin chain. We can see that the colors of the rows are red, orange, light yellow, gray and light blue from top to bottom. The blue at the bottom represents that most people are losing money, while the red at the top represents that most players are making a profit.
When the line chart is in the light blue area, it is often the bottom range of BTC prices, because people who cut their losses continue to leave the market to form a bottom. When the line chart is in the yellow or red range, it is often the top range of BTC prices. After most people make a profit, a considerable number of profit-taking orders will choose to stop profit and leave the market, resulting in the top of the cycle. The cycle repeats.
Judging from the line chart, the market is currently at the high point of the yellow area, and more than 52% of Bitcoin players are still in a state of unrealized net profit.
In past cycles, the broken line dropped sharply to the green zone twice, which means that most people were in a loss. This has only happened once in this cycle, and it remains to be seen whether history will repeat itself in the future.
HODL Supply
This data chart is mainly used to observe the performance of Bitcoin HODL data. Here we define short-term users as those who hold coins for less than 1 year, and long-term users as those who hold coins for more than 1 year.
At the top of the bull market, long-term holders often take profits and leave the market, so their share will decrease. Short-term holders often rush in to buy when prices are high, and you will see that the supply share is obviously quite high.
If the above picture is not clear enough, you can refer to the picture below. The peak of the increase in the number of short-term coin holders is often also the stage top of the coin price.
From this chart, we can also find an interesting phenomenon. As the price of BTC continues to rise, players with insufficient financial strength may no longer be able to buy enough BTC. This results in that although the supply of short-term holders will have a certain peak in coin holdings, it is far less than the peak holdings in the past two bull markets.
When the proportion of long-term holders decreases, it is often the top range of the market (see the figure below). They are the smart money in the market.
From the chart, we can see that in the recent bull market, long-term holders began to sell off in January this year, accelerated around February, and continued to sell off until now. So far, the speed of their exit has slowed down.
Long-term trend indicator MVRV Z-Score
This indicator uses the total market cost as the base number and mainly reflects the overall profitability of the market. The light red area is MVRV, and the line graph is Z-Scroe (highlighting the extreme data between market value and realized value). When the orange line graph touches the light red area, it is the top of the market. If it is further subdivided, when it is above 6, it is also the top range.
When the orange line graph is in the light blue area, it means that the holders are generally in a loss state. The current indicator is 2, which is in the middle stage.
Bitcoin contract open interest
In the past few months, a very interesting phenomenon is that every time the open interest of Bitcoin contracts on the entire network hits a record high, it is often the peak of the BTC price.
For example,
March 4, $29 billion, BTC price $68,499
March 13, $33.9 billion, BTC price $73,650
March 29, $38.8 billion, BTC price $70,780
June 7, $38 billion, BTC price $71,997;
Contract data represents the market funds' views on future market trends. When the market is unanimously optimistic about the short-term trend and continues to increase leverage, a correction will often occur in order to clean up the chips and move forward lightly.
summary
In addition to the above indicators, other methods for judging market conditions include Ethereum Gas fees, social media activity, integer threshold Schelling points, and other factors. It is both a science and an art. Investors need to comprehensively and rationally evaluate the above indicators in order to better grasp market opportunities.