Have you been able to stay on top of the massive swings Bitcoin's price has endured to kick off the New Year? Following its all-time high back on November 10th, cryptocurrency's top asset has retraced a mammoth -47% in these previous 11 weeks, and -23% thus far in 2022.

In times like these, it can be difficult to avoid the instinct of just jumping ship and forgetting about cryptocurrency altogether. FUD (fear, uncertainty, doubt) is a very real thing when it comes to market downswings. Especially in a sector as volatile as crypto. But for the "diamond hands" out there, in which we know there are many, keeping tabs on overall market health is vitally important.

But remember - other traders' pain can be your gain in crypto, which has been known for its major volatility and cycles for well over a decade now. And many are now speculating that markets are already priced in as preparation for the FOMC meeting happening in just 2 days. This event notoriously sees large price drops heading into the event, and both institutional and retail traders alike have shown increased interest as evidenced by the increased social volume related to the FOMC:

As far as Santiment's metrics go, and what they're currently revealing to us, we will touch on the on-chain and social side of Bitcoin, along with what is going on with key events that could trigger more interesting price action to take advantage of.

On-Chain Metrics

Active Addresses

The amount of address activity a crypto asset reveals just how many unique addresses really are interacting on the BTC network on a daily basis. And right now, the answer is... nothing special. However, the amount of addresses haven't dropped off considerably as prices have fallen, either!

Take a look at how daily active addresses have compared to prices in our divergence chart:

It would make sense that the ratio between active addresses and price has risen with prices falling rapidly, and active addresses essentially staying on par. But this isn't always the case. And generally, prices only see a continued fall if they're above 0 on this chart. So keep an eye out for if this ratio stays abnormally high, as it appears to be now.

Token Circulation

Token circulation has been seeing a bit of a lull for the majority of 2022, and the verdict is out on whether this recovery in unique tokens moving on the network is legitimate, or just fools' gold. After bottoming out last week, the amount of tokens circulating on BTC's network is back to where things were in early December.

According to our NVT Token Circulation Sansheets model, things are looking neutral through the majority of January. And that's a good thing, considering just how volatile things have looked:

Average MVRV

According to our data reflecting Bitcoin investors' average trading returns across multiple timeframes, the Average MVRV chart hasn't been this low since Black Thursday (March, 2020). If you follow the MVRV metric, you'd know that the lower we go here, the better. And with the Average MVRV sitting at -0.198, this is well below the historic 'Opportunity Zone' of -0.150. Of all the metrics showing bullishness right now, this one appears to be the most definitively so.

Social Metrics

Social Dominance

Bitcoin had been on quite the plunge, in terms of discussion rates dedicated to the asset in comparison to other altcoins. Social dominance really bottomed out at the beginning of December, with almost all focus dedicated to other projects while BTC was ignored. Not surprisingly, this led to a subsequent price drop, which prices have only dropped lower from since.

Now, with Bitcoin-related discussions rising once again, we are seeing more and more polarization, which is healthy and good for the crypto markets. If this rise continues, it is a sign that the #1 market cap asset is finally sparking interests once again.

Social Volume

Similar to social dominance, social volume is showing a much-needed uptick. Just a few hours before this article was published, Bitcoin had the highest amount of mentions since December 1st, just prior to the major drop to below $45k. Typically, these major spikes happen in tandem with price turnaround, and considering the direction of BTC's price the past couple months, any turnaround has a high probability of being a positive one.

Mentions of "Buy The Dip"

We have documented several instances of the crypto crowd believing uniformly that one outcome will occur, and then the opposite coming to fruition. Mentions of #buythedip is one of those telltale key terms that we keep an eye on when markets have been dropping for any length of time. When the crowd is mentioning that it's time to buy the dip, this usually indicates that there isn't enough fear yet, and it in fact is NOT the time to buy just yet. Once the #buythedip mentions settle down, this is the actual dip to buy.

Note that just prior to the bounce on Monday, there was a drop in mentions of buying the dip. This is exactly the signal you should be watching for. With prices have sliding slightly again, we will want to see if mentions pick up again (which would indicate prices are likely to continue sliding), or whether they'll fade (meaning the crowd no longer believes this is the dip to buy, when it actually is).

Conclusions

Overall, our metrics appear to be indicating that it is a better than average time to buy. But just like in any trading sector, nothing is a certainty. Just when we think a metric such as MVRV can't go any lower, simply because it hasn't in 2 years, doesn't mean that history can't be made. But in trading, especially something less regulated and speculation-driven like crypto, focusing on probable outcomes instead of absolute certainties, is generally the way to profits.

Disclaimer: The opinions expressed in this report are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.