6 such indicators that show that Bitcoin is an unrepeatable investment opportunity
Since the beginning of 2023, Bitcoin has seen a growth of nearly 35% in its value. However, according to one analyst, such data suggests that despite this growth, Bitcoin could still be a “generational buying opportunity”.
In finance, the term “generational buying opportunity” is used to describe when asset prices have fallen to such an extent that they are unlikely to rise again.
To the report Kevin Telegraph, Game of Trades researcher and analyst, mentioned 6 such Bitcoin criteria on his Twitter on January 24 (Bahman 4).
The first indicator is the Accumulation Trend Score, which indicates the changes in the balance of addresses that are actively accumulating or selling their coins, and measures the two measures of total balance and balance changes per month.
This analyst noted:
Since the collapse of the FTX exchange, wallets with large holdings have been piling up heavily… a similar pattern of piling up at the market bottoms of 2018 and 2020.
The Bitcoin entity-adjusted dormancy flow index is a measure that calculates the ratio of the current market value to the annual dormancy value in dollars.
Whenever the bearish value exceeds the market value, it can be concluded that the market is in a complete surrender phase, which is historically a good area to buy.
According to Glassnode, this index has fallen to its lowest historical level in 2022.
The Reserve Risk Index of Bitcoin can be used to measure the confidence of long-term holders towards the price of Bitcoin. According to Golsnod, this index also fell to its lowest level in late 2022.
The realized price of Bitcoin (Realized Price) is the value of all Bitcoins at the purchase price divided by the number of Bitcoins in circulation. In other words, this index is an estimate of the capital that the entire market pays to buy the coins in circulation.
According to data from Woo Charts, Bitcoin traded below its realized price level from the fall of FTX in November to January 13 and is currently slightly above this level. Which indicates another buying opportunity.
The Z-score index to the MVRV ratio indicates when Bitcoin is significantly overvalued or undervalued relative to its fair value or realized price. When the indicator breaks out of the deeply undervalued area, it is often considered the end of a bear market.
Finally, Puell Multiple examines the fundamentals of mining profitability and its impact on market cycles.
Lower values of this index, as at present, indicate miners’ stress and buying opportunities with a long-term view.
In the end, this analyst concluded that these 6 such indicators point to the formation of an exceptional risk-to-reward situation in the Bitcoin price trend. These metrics are all at similar levels to the market cycle lows of 2015, 2018 and 2022, he added.