In the Bitcoin market, the biggest question for any investor is, “When should I invest?” And that’s a fair question, especially since profitability is the only driving factor for an investor.
Well, it looks like the opportunity has come once again as Bitcoin has seen its highest profitability in a while. This is how you can bet on it –
Bitcoin is profitable
Based on the strong market rally over the past 6 weeks and the massive crash that followed, there are some concerns about whether the market will overheat or not.
An overheated market refers to a rapidly growing market that is no longer sustainable. However, this doesn’t seem to be the case if you look at the BTC market right now. In fact, this is the best time to jump in as the buying opportunity is pretty profitable right now.
Traditionally, the 200-day moving average (DMA) has been the standard indicator for buying and selling. When the price of BTC is above this it is usually the start of a strong upward move. On the contrary, moving in the opposite direction is usually indicative of a fall.
At the moment, Bitcoin’s price movement is in line with the 200 DMA – a clear sign that the market is not overheating.
In fact, another buy signal comes from the Mayer multiple. The indicator’s low readings at the time of going to press seemed to suggest that Bitcoin is cheap compared to long-term trends. Implicitly, this means that the present is a good time to buy.
At the time of writing, having the above metric below 1 was a good enough signal.
However, in order to understand the state of the market for investments, it is necessary to check the total value of the market whether it is in a profit or loss state.
How is the market doing?
To check profitability we can use the MVRV ratio, the historical highs of which, after halving, underline signs of a bull market. As a result, the market signs didn’t seem particularly indicative of a bull run.
And yet, given the 2.2 MVRV at print time, it could be the start of one. The values from 2.0 to 5.0 indicate profitable returns that can be expected within a month. This is the sweet spot for investing and you can expect profits to be made within a month.
Anything above 5.0 is not good, however, as it suggests that corrections will arrive within a month. However, the market is a long way from that. In fact, the MVRV hasn’t been close to 5 for over 7 years.
Finally, it’s just as important to understand market sentiment. That way you can gauge where the market is really going.
At the time of going to press, the Fear and Greed Index was 30.0, its lowest level in 50 days. A price consolidation or recovery could push them back into the neutral zone. This will again be a good sign for investors looking for profits.
All in all, the market is in a healthy state with the above indicators flashing buy signals as profitability is coming soon.