What’s A Simple Strategy For Buying & Selling Bitcoin? This Analyst Answers
March 29 2024 - 9:00PM
NEWSBTC
An analyst has revealed a simple strategy for buying and selling
Bitcoin using the historical pattern followed by two BTC on-chain
indicators. These Bitcoin On-Chain Indicators Have Followed A
Specific Pattern Historically In a post on X, CryptoQuant author
Axel Adler Jr. discussed a simple strategy for timing buying and
selling moves for Bitcoin. The strategy is based on the trend
witnessed historically in two BTC on-chain metrics: the Net
Unrealized Loss (NUL) and Net Unrealized Profit (NUP). As their
names suggest, these indicators keep track of the total amount of
unrealized loss and unrealized profit that the investors are
currently carrying. Related Reading: Coinbase Sees Largest USDC
Inflow Ever, What This Could Mean For Bitcoin These metrics work by
going through the transaction history of each coin in circulation
to see what price it was last transacted at. Assuming that the last
transfer of each coin was the last time it changed hands, the price
at its instant would act as its current cost basis. If the previous
price for any coin was less than the current spot price of the
cryptocurrency, then that coin is currently carrying a profit. The
NUP subtracts the two to calculate the exact unrealized gain for
the coin. Similarly, the NUL does the same for coins that have
their cost basis above the latest value of the asset. These
indicators then sum up this value for the entire supply and divide
the sum by the current market cap. Now, first, here is a chart
shared by the analyst for the NUL that reveals a pattern that the
metric has been following throughout the history of Bitcoin: The
value of the metric seems to have been heading down in recent days
| Source: @AxelAdlerJr on X The Bitcoin NUL appears to have
historically broken above the 0.5 level when the asset’s price has
traded around bear market lows. According to Axel, the indicator in
this territory would be the moment to buy more. Recently, the
metric has been floating around the zero mark, meaning that there
has been any unrealized loss being held by the investors. This
makes sense, as the cryptocurrency has set new all-time highs
(ATHs). Naturally, 100% of the supply goes into profit when an ATH
is set. Similar to the pattern in the NUL, the NUP has been above
the 0.7 level during major tops in the past, suggesting that it may
be a good opportunity to sell when the indicator is in this zone.
Looks like the value of the indicator has been climbing up recently
| Source: @AxelAdlerJr on X As is visible in the chart, the NUP has
been marching up with the recent rally in Bitcoin. Still, so far,
the indicator hasn’t broken above the seemingly important 0.7
level, implying that the market may not yet be in an overheated
place where selling would be ideal, at least according to this
strategy. The graphs of the two indicators, though, show that
neither of them flagged the exact tops or bottoms in the asset.
It’s especially prominent in the data of the NUP, where the metric
signaled “sell” during tops that were merely halfway through the
bull run. Related Reading: Bitcoin Bull Flag Could Predict 10%
Surge To $77,000, Analyst Explains That said, buying during the
points flagged by the NUL and then selling at the overheated NUP
values would have historically been profitable. In that sense, this
would indeed be a “simple” strategy for the asset. It remains to be
seen, though, whether these patterns will continue to hold in the
current Bitcoin cycle as well. BTC Price At the time of writing,
Bitcoin is trading at around $69,400, down 2% over the past 24
hours. The price of the asset appears to have been moving sideways
recently | Source: BTCUSD on TradingView Featured image from
Kanchanara on Unsplash.com, CryptoQuant.com, chart from
TradingView.com
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