Time to buy Bitcoin?

DISCLAIMER - This content is provided for entertainment purposes only and should not be construed in any manner as a solicitation or offer to buy or sell any securities, investment opportunities, or related financial instruments. Crypto can be cruel so never risk money you cannot afford to lose.


This is my personal take on a Bitcoin buy opportunity. DYOR 🙂


Bitcoin has had a difficult start to 2022, losing around a quarter of its value, before a tentative recovery. At the time of writing BTC is sitting just above the $38k mark, 20% down on the year open, and many are forecasting more bad news to come. So what lies ahead in the short term for BTC and is a decent trade to be made under these troubling conditions?


Network Realised Profits

In this first chart, we consider the Network Realised Profit/Loss. Here, a positive spike indicates the realization of profit, and conversely, a negative spike indicates holders are selling at a loss (averages).


NRP


For BTC we can see that within an hour or so of around $50M in profit-taking on 20th Feb, the price dropped, triggering two, negative spikes totaling around $43M in losses.


These negative spikes are most likely caused by FUD panic as the profit-taking drove the price down. Panic selling could indicate a good time to buy.


My take: Tentative Buy


Age Consumed

If we now take a look at the age consumed data, on the 1st Feb we see a big spike totaling $191m. As we can see from the chart, abnormally big spikes usually precede significant increases in price.


Age Consumed

Looking back to September 21, after a $69m spike, the price rose from $43k to $66k over the following month. And going further back, a $15m spike at the end of July was followed by a price lift from $40k to $52k. This is looking very positive for Bitcoin.


My take: Tentative Buy


Exchange Inflow

Next, we turn to Exchange inflow to look for signs of possible dumping. In the week we can see three abnormally high spikes of inflow together with several moderate spikes. My take on this is that it is still a difficult read. At around 10,000 tokens, these spikes are nowhere near the millions of tokens we saw last September.


Exchange Inflow

My take: Neutral


Social Volume

Now let’s look at the Social Volume metrics. The chart is showing an uptick in the moving averages over today (20 Feb), but no indication of the beginning of a hype cycle. This potentially indicates a period of cooling since the recent falls. Is this the eye of a hurricane or can we expect an improvement in the weather?


Social Volume

My take: May rapidly go either way


Technicals

So on the basis of these indicators, I see a tentative buy opportunity, but at what levels? Time to look at some technicals.


We will start with the Moving Average, and this first chart shows the data from the beginning of 2021 to date. The thick blue line is loose support at around $37,000, and the thinner blue line is the MA30 line.


MA and Support


What is interesting about this is that from the start of 2021 the price of BTC has not wandered more than around 5% below the MA30 line.


If we now switch to a smaller timeframe, just this current month, we can see some more interesting pattern - a Bat Harmonic.


BTC Bat Harmonic


This pattern often signals a temporary change in price direction before resuming the trend. In this case, Bitcoin was trending up from 26 Jan to around 10 Feb, before a double-top ahead of a downward movement.


So from the earlier analysis, I have a tentative buy, although it may be a short-lived opportunity. Running with the MA30 line over the past year, BTC may well bounce again at around the $37,000 mark. And finally, the bat harmonic indicates a potential buy at around the $37,000 mark.


Taken together, my trade would be based on the Bat indicators of entry at $36600 and stop-loss at $35,000. A modest sell target would be $40,000 and a more aggressive sell target, $42,000 - Risk/Reward 3.37.


You can find my Bat Harmonic chart here: https://www.tradingview.com/x/ERjc6SAJ

You can find me on Twitter https://twitter.com/imagepunk

Santiment analytics (Aff): https://bit.ly/CHsantiment

Thanks for reading!

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