• 23 July, 2024
Market News

This On-Chain Metric Tells You When To Buy Bitcoin As Price Breaches $22k

Bitcoin price breaks below $22k amid cautious market mood following Silvergate anxiety

Bitcoin price continued to drift lower amid bearish sentiment. The price breaks below the critical $22k mark with a pessimistic view. Investors remained concerned with their Bitcoin positioning  amid the hawkish Fed view and the Silvergate Capital turmoil. As of press time, BTC/USD is reading at $21,790, down 0.31% for the day.

Source: Trading view

According to the on-chain analytic firm Cryptoquant, the Bitcoin Composite Index (BCI) is an important indicator that could help investors in making the right decision about when to start accumulating or distributing the coin.

The BCI is formulated in identifying the overbought or the oversold Bitcoin market condition. Two metrics are used to calculate the index, Net Unrealized Profit/Loss (NUPL), and Market Value to Realized value (MVRV), which are smoothed with a moving average.

Source: CryptoQuant

How to read the BCI oscillator

BCI indicator acts as other oscillators only, pointing to the price cycle peaks and bottom used to sell or buy the asset.

When the BCI drops below 1 into the red zone, this generally means the bottom of the market. Investors can capitalize on the market structure and hop into a buying opportunity. On the other side, if the index rises above 1 into the green zone, this could be a warning sign for the bulls.

Further, when the index reads the $0.8 mark the buyers are advised to liquidate their position as it could be the end of a bullish cycle. As of writing, the index value is at 0.08.

However, a word of advice is never depend on a sole metric always combine market fundamentals and technical analysis to conclude the position.

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