In the cryptocurrency market, the sharp volatility of Bitcoin has always been one of the biggest challenges facing investors. However, volatility not only means risk, but also provides experienced people with a good opportunity to buy at the bottom. The so-called "bottom fishing" means buying when the price of Bitcoin drops sharply, waiting for the price to rebound in the future to profit from it. Using a variety of technical indicators for comprehensive analysis can improve the accuracy of bottom fishing decisions. This article will deeply explore the commonly used technical indicators and their specific application strategies when bottom fishing.

1. Relative Strength Index (RSI)

The Relative Strength Index (RSI) is a widely used momentum indicator used to determine whether an asset is overbought or oversold. When the RSI is below 30, it means that Bitcoin may be oversold and market sentiment tends to be extremely pessimistic, which is often a good time to buy the dip.

Taking Bitcoin as an example, during the 2022 crash, the RSI fell below 30 several times, indicating that the market was extremely oversold, and then the Bitcoin price rebounded. For investors, when the RSI is at a low level, you can start to pay attention to potential buying opportunities.

2. Moving Average (MA)

Moving average (MA) is the most basic and commonly used tool in technical analysis. By observing Bitcoin's short-term and long-term moving averages, investors can identify changes in market trends. When the 50-day moving average falls below the 200-day moving average, a "death cross" is formed, which usually indicates that the market may fall further. But when the short-term moving average crosses the long-term moving average from below to form a "golden cross", it often means that the market has bottomed out and rebounded.

For example, after the market crash in March 2020, the 50-day moving average formed a golden cross with the 200-day moving average, and Bitcoin subsequently launched a strong rise. This shows that moving averages can help investors seize bargain hunting opportunities, especially when market trends reverse.

3. Bollinger Bands

Bollinger Bands are a volatility indicator that consists of a moving average in the middle and two standard deviation lines above and below. When the price falls to the lower band of the Bollinger Bands, it means that Bitcoin may be undervalued, and there is a greater chance of bottom-fishing. If the price breaks through the lower band and rebounds, it often means that the selling pressure has weakened.

From May to July 2021, Bitcoin touched the lower track of the Bollinger Bands many times, and each time it touched, it was accompanied by a price rebound. For short-term investors, the Bollinger Bands can be used to seize short-term low-point buying opportunities.

4. Fibonacci Retracement Levels

Fibonacci retracement lines are a classic tool for predicting price pullback support levels, with common pullback ratios including 38.2%, 50%, and 61.8%. When the price of Bitcoin pulls back to these key points, support is often formed, leading to a rebound.

For example, in the bull market of 2021, Bitcoin fell from a high of $60,000 to a low of $30,000, and just rebounded near the 61.8% retracement level. This shows that the Fibonacci retracement line has a high reference value in the Bitcoin market.

5. Volume

Trading volume is an important indicator of market sentiment and capital flow. When buying at the bottom, it is particularly important to observe the relationship between price and trading volume. If the price falls while the trading volume is also decreasing, it means that the downward momentum is insufficient and it may be about to bottom out and rebound. However, if the trading volume increases significantly during the decline, it means that the market sentiment is biased towards panic and the risk of buying at the bottom in the short term is high.

For example, during the 2018 Bitcoin bear market, when the price fell to around $6,000, trading volume increased significantly, indicating a large amount of buying entering the market, which provided momentum for the subsequent rebound.

6. MACD (Moving Average Convergence Divergence)

MACD is a commonly used trend-following indicator that helps investors identify buy and sell signals in the market. When the MACD line crosses the signal line from below, a "golden cross" is formed, which is a strong buy signal and indicates that the market may rebound.

Take July 2021 as an example. When the price of Bitcoin was around US$30,000, the MACD indicator formed a golden cross, followed by a sharp rise in the market. This signal successfully predicted the arrival of the bottom.

7. Fear and Greed Index

Market sentiment plays an important role in Bitcoin price movements. The Fear and Greed Index can quantify market sentiment. When the index is at "extreme fear", it is often the stage of overselling in the market, which is also a good time to buy at the bottom.

For example, between May and July 2021, the Fear and Greed Index fell into the extreme fear range several times, at the same time that Bitcoin's price hit lows and then rebounded. This shows that extreme market sentiment often indicates that the market bottom is approaching.

8. On-Chain Data

In addition to traditional technical analysis, on-chain data is also an important reference factor when buying Bitcoin at the bottom. On-chain data such as the number of active addresses, holding time, and the amount of Bitcoin flowing into exchanges can provide more insights into market sentiment and capital flows.

For example, when Bitcoin holders hold their coins for a long time and short-term speculators transfer a large amount of Bitcoin to exchanges for sale, it often means that market sentiment is overly pessimistic and the bottom may be forming.

Summary: Bottom-picking strategy combining multiple indicators

The best strategy for bottom fishing is to combine multiple technical indicators and market data to form a comprehensive judgment. Technical indicators such as RSI, Bollinger Bands, MACD, etc. can help you identify the short-term and long-term bottoms of the market, while on-chain data and market sentiment indicators provide more dimensional references for bottom fishing.

Although these indicators have successfully predicted the market bottom of Bitcoin many times in history, the volatility of the crypto market is still high, and you still need to be cautious and do a good job of risk control when buying at the bottom. At the same time, you need to remain rational, continue to learn and optimize your strategy to gain long-term benefits in the volatility of the Bitcoin market.

In the future market, as technology advances, analytical methods will become more sophisticated. For those seeking bargain hunting opportunities, understanding market structure and flexibly using a variety of analytical tools are the keys to long-term success.

$BTC $ETH $BNB