What is the general sentiment for Crypto?

The sentiment towards the cryptocurrency market continues to remain in the Fear zone. Compared to last week’s, the Fear & Greed Index has changed marginally from “28” to “27”. 

SOPR

Another data to evaluate the sentiment of the general public would be to look at Spent Output Profit Ratio (SOPR). What is SOPR? In layman terms, it indicates if people have sold their BTC at a profit or if they sold at a loss. An SOPR value above 1 indicates that profit booking dominated loss booking and below 1 indicates that loss booking dominated profit booking. A value of 1 indicates that the coins were sold at their purchase price. Adjusted SOPR filters out transactions that are younger than 1 hour, thus, clearing out noise from the metric.

aSOPR for this week stands at 0.98 which means the coins were sold at their purchase price

Is This The End of the Bear Market?

CVDD-BALANCED PRICE CHART INDICATOR

CVDD –  tracks the cumulative sum of this value-time destruction as coins move from old hands into new hands as a ratio of the market age. It is then multiplied by 6 million, which is a somewhat arbitrary number as it is not linked to any relevant Bitcoin data.

The result is that it has historically correctly forecasted the major lows of Bitcoins price with good accuracy. Currently the CVDD stands at $17,160

BALANCED PRICE – This is an on-chain indicator used for Bitcoin price prediction at the bear market lows. This means that it is trying to identify the lowest price that Bitcoin may drop to in the future. 

It is calculated by subtracting Transferred Price from Realized Price. Currently the BALANCED PRICE stands at $14,436

Balanced price has crossed below CVDD and Bitcoin price is trading below the cross. Historically the bottom formation was seen in such situations.

REALIZED PRICE

Realized price is defined as the average cost of acquisition based on every coin moved on-chain. In all the previous bear markets we see that the price trades below the realized price which indicates on average the coins held during this period have higher cost of acquisition than the current market price. Realized prices act as psychological support areas during bear markets.

How Is Realized Price Useful For Bitcoin Investors?

It is a useful metric because it can show when the market is under a period of distress. That is when the current Market Price drops below Realized Price, meaning that on aggregate Bitcoin holders are holding onto paper losses. 

Historically, these periods have occurred at major cycle lows. This can be seen on the free Bitcoin live chart above.

The reason why this phenomenon happens is that many participants are not comfortable holding onto a losing position, fearing that their losses may increase. Particularly in a bear market when news and media about Bitcoin are very negative. They end up selling to value investors at the market cycle lows before $BTC Market Price eventually moves back up above Realized Price as it enters a bull market phase. This has historically held true as Bitcoin has continued to move through its adoption cycle.

The current price of Bitcoin is trading below the realized price of Bitcoin of 19,785 USD. For bull market confirmation, the market price of Bitcoin should be above realized price. 

MVRV Z-SCORE

The MVRV Z-score has historically been very effective in identifying periods where market value is moving unusually high above realized value. These periods are highlighted by the z-score (red line) entering the pink box and indicating the top of market cycles. It has been able to pick the market high of each cycle within two weeks.

It also shows when market value is far below realized value, highlighted by z-score entering the green box. It is the accumulation phase and can last anywhere between 2 to 4 quarters, Buying Bitcoin during these periods has historically produced outsized returns.

Overall Market Performance

Dow Jones

The Dow Jones Industrial Average corrected by -0.27% in the last week. The next resistance is expected at 35,400 and immediate support is expected at 32,650 levels.

Gold

Gold Futures formed Inverted head and shoulder pattern and its trading within a range, trend reversal is expected. The next resistance is expected at $1,830 and immediate support is expected at $1,780

Bitcoin

Bitcoin is trading within the channel pattern. The next resistance is expected at $18, 388 and support at $15,476

ETHEREUM

ETH RSI on a weekly timeframe has broken out of the descending trendline, also the price action is trading above the June 2022 low of $881.56 which is a higher low. This could be indication of trend reversal, the immediate support is expected at $1,073 and next resistance is expected at $2,030

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