Time to market exceeds market timing
The recent talk on the street is that we are entering a bear market. While everyone is plagued with FUD (Fear, Uncertainty, and Doubt), this article seeks to reduce the noise and offers 4 data-driven reasons why this market is nearly dead.
The simple fact is that FUD was born from merchants and media. They push a story that suits them. However, the easiest way to block out the noise is to think like an investor, not a trader.
Investors have a long time frame and don't get sucked into the hype that floods our screens every day.
As Mark Twain so elegantly said: “It's not what you don't know that gets you into trouble. It's what you know for sure is simply not the case.
What he means by this is that believing in a forced narrative without understanding it may be what causes you the most trouble when investing. Even though the masses may believe that the crypto market is almost over (with the bear narrative being pushed all over town), what if the bear market was “what you know for sure isn't the case”?
Forget the noise, understand the advantage.
Crypto is like an early stage technology investment. Throughout history, innovative technology has always brought volatility.
Whether from a horse to a car (combustion engine), from a handwritten letter to an email (Internet) or from centralized to decentralized systems (cryptocurrencies), progress is always moving forward.
The reason is that disruptive innovation does just that: disrupt. This upsets the feathers and creates the volatility that the market is currently experiencing.
Now that we know what we're investing in, let's take a look 4 data-driven reasons why this might not be the bear market everyone thinks.
Follow 'Smart Money' for Real Crypto Trends
1) We've Been Here Before: Historic Setbacks vs. Rallies
Opposite investor Baron Rothschild said: "The time to buy is when there's blood on the streets."
Basically it says that the best buying opportunities arise when no one wants to buy.
In the case of Bitcoin, we have seen these pullbacks far too often. However, every time people panic and think that the end is near, they are wrong again.
During the recent bull market, Bitcoin had more than 6 retracements above -20% and each time it continued to rise more than it fell. Bitcoin's recent pullback has been textbook, Bitcoin is now -40% below its all-time highs of €69,000. While many believe that we will likely see another drop to €32,000 Bitcoin marks the start of the “bear market”, a very similar view to the one taken in July 2021 when Bitcoin was following the €29,000 line.
Does this all sound eerily similar?
do we suck? will we recover?
The truth is that no one knows what the market will do. But historically, buying on dips of more than -30% has proven to be a good long-term decision.
2) “Be afraid when others are greedy. Be greedy when others are afraid."
Another setback brings another bout of fear...but what if it actually brings opportunity?
Fortunately for us, we have a data-driven indicator that tracks market sentiment: it's called the Fear & Greed Index.
What could you ask?
In its basic form, the Fear & Greed Index measures investor sentiment toward the market. The index is made up of various market factors such as volatility, momentum, social media, and surveys.
As you can see above, the quote is true to its words. Every time the Fear & Greed Index displayed 'Extreme Fear', it might as well have flashed 'Buy'.
With the Fear & Greed Index at its lowest level since July 2021, isn't this the same sign?
The last time the index was this low, the market bottomed around €29,000 Bitcoin and rallied over 130% to push the market to new all-time highs.
Some might even notice that the index currently reads "Extreme Fear"...
3) Follow the smart money
Do you remember our elders telling you: "Do what I say and not what I do"?
Well, it turns out that's not ideal when it comes to investing.
Instead of falling into the trap of following "what they say," just look at what smart investors are doing with their money.
How I do this? Tracking what the so-called “smart money” is doing. In crypto, everyone's wallets are visible to the public so you can see what they're focused on, and what money.
As seen above, long-term Bitcoin holders are in a peak accumulation phase. This means that these investors (who can be considered smart long-term investors) are buying this recent pullback and will sell the next rally.
4) Valuable purchases
Another historically reliable blockchain indicator suggests that Bitcoin may be in the final stages of a downtrend, having lost almost -40% of its value in the last two months.
Entity-adjusted quiescent flow compares Bitcoin's market capitalization (i.e., the value of all Bitcoins in circulation) to the annualized dollar value of the quiescent coins (i.e., the length of time that the coins traded have not have been moved, i.e. inactive x current price ).
Without getting too elaborate, this all really shows that the overall value of the Bitcoin market is undervalued relative to the value and age of the coins being sold. It also comes at a time when, as seen above, long-term holders are not selling.
Now, you don't have to be a chart expert to see a clear trend here. Historically, whenever the entity-adjusted idle flow touches the green box below, it coincides with a macro bottom in the Bitcoin price. This indicator has marked all previous bear market lows, namely: 2011, 2015, and 2019 market lows. It also continued to call the bottom of the COVID-19 crash in March 2020 and is blinking again.
Going by history, this indicator has been relatively good at detecting when a market is entering its lower levels.
I get it, so maybe investing now isn't a bad idea. But how do I get exposure?
el 4 data driven the above points make a strong argument that there is potentially still life in this torus. In the long term, Bitcoin, and in turn, cryptocurrencies, are just getting started.
Brett Hope Robertson, chief investment officer at investment platform Revix, said: “You don't have to be an experienced investor to beat the traditional markets. The data suggests that you could have chosen any time in Bitcoins history to invest, be it market highs, bear markets, or anytime. As long as you owned it for 5 years after purchase, the minimum you would have earned is +27% year-over-year over the 5-year period. This means that you would have outperformed around 99% of fund managers simply by picking the worst possible time to invest. So you need to have a long-term investment horizon in this game.”
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About Revix
Revix brings simplicity, trust, and excellent customer service to investment. Its easy-to-use online platform allows anyone to securely hold the world's best investments with just a few clicks.
Revix guides new clients through the registration process to their first deposit and first investment. Once set up, most customers manage their own portfolio, but can access support from the Revix team at any time.
For more information please visit www.revix.es
This article is intended for informational purposes only. Opinions expressed are not and should not be construed as investment advice or recommendations. This article is not an offer, nor is it a solicitation of an offer, to buy or sell any of the assets or securities mentioned in this document. You should not invest more than you can afford to lose and, before investing, consider your level of experience, your investment objectives, and seek independent financial advice if necessary.
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