Contrarian Bitcoin Investors Identify Buy Zones Even As Extreme Fear Takes Over The Market

Bitcoin (BTC) support at the $30,000 level has proven quite resilient amid the turmoil of the past two weeks, with many tokens in the top 100 now showing signs of consolidation after prices rebounded from their lows. recent.

Fear and greed index. Source: Alternative.me

During high volatility and sell-offs, it is difficult to have a contrary opinion, and traders might consider stepping away from all the noise and negative news flow to focus on their fundamental convictions and the reason they originally invested in Bitcoin. .

Several data points suggest that Bitcoin could be reaching a bottom that is expected to be followed by a long period of consolidation. Let’s take a look at what the experts are saying.

BTC may have already hit ‘peak pain’

Root, a pseudonymous analyst, referred to the increase in losses made by Bitcoin holders, who tweeted chart below and said realized losses are “reaching bear market highs.”

Bitcoin made profit/loss. Source: Twitter

While previous bear markets have seen a higher level of realized losses than are currently present, they also suggest that the pain could start to ease soon, allowing Bitcoin to begin the slow road to recovery.

Analysts have also noted that “Bitcoin’s RSI is now entering a period that has historically preceded outsized investment returns for long-term investors.”

RSI BTC/USD. Source: Twitter

According to Rekt Capital:

“Previous reversals from this area include January 2015, December 2018 and March 2020. All bear market bottoms.”

Strong hands stand firm

Jurrien Timmer, Global Head of Macro at Fidelity, provided additional on-chain evidence that Bitcoin could soon see a resurgence. According to Bitcoin Dormancy Flow, a metric that shows Bitcoin’s latency flow that “broadly speaking is a measure of strong hands versus weak hands.”

Bitcoin latency stream. Source: Twitter

Timmer said:

“Glassnode’s entity-adjusted idle stream is now at the lowest level since the 2014 and 2018 lows.”

One metric that suggests weak hands may be close to capitulation is the advanced NVT signal, which looks at the network value to transactions (NVT) ratio and includes standard deviation (SD) bands to identify when Bitcoin is overbought or oversold.

Advanced NVT signal. Source: LookIntoBitcoin

As shown in the chart above, the advanced NVT signal, which is highlighted in light blue, is now more than 1.2 standard deviations below the mean, suggesting that Bitcoin is currently oversold.

Previous instances of the NVT signal falling below the -1.2 SD level have been followed by increases in BTC price, although it can sometimes take several months to manifest.

Related: Bitcoin Price Predictions Abound as Traders Focus on BTC’s Next Halving Cycle

Hash rate hits a new all-time high

Complex on-chain metrics aside, there are several other factors that suggest Bitcoin could see a boost in the near future.

Data from Glassnode shows that the Bitcoin network hash rate is now at an all-time high, indicating that there has been a substantial increase in investments in mining infrastructure with the greatest growth occurring in the United States. Joined.

Average Bitcoin hash rate vs. BTC price. Source: Glassnode

Based on the chart above, the price of BTC has historically trended higher along with increases in the average hash rate, suggesting that BTC could soon embark on an uptrend.

One last bit of hope can be found by looking at Google Trends data for Bitcoin, which points to an increase in search interest following the recent market downturn.

Interest in searching Bitcoin over time. Source: Google Trends

Previous spikes in Google search interest have largely coincided with a spike in Bitcoin’s price, so it’s possible that BTC could at least see a relief bounce in the near future if fringe investors see this as a chance to get some discounted Satoshis. .

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should do your own research when making a decision.