The Bitcoin price indicator that made BTC "look ridiculously cheap" at $56,000 is now in rare oversold territory.
In a Dec. 6 tweet, Philip Swift, creator of analytics platform LookIntoBitcoin, returned to a possible bullish signal from Bitcoin’s Advanced NVT Signal.
Advanced NVT uses market capitalization and network volume to calculate whether Bitcoin is overbought or oversold at a certain price point.
In late November, when BTC/USD had fallen to $56,000, Swift believed that Bitcoin would rebound.
The indicator then continued to fall along with the spot price due to Friday's massive liquidation. A possible upside, however, is the return of NVT's "oversold" cues -- something that has only happened six times since 2015.
“There’s a lot of fear in the market right now, which makes me bullish. A lot of indicators suggest we’re nearing the bottom,” he said.
“Advanced NVT Signal looks at price relative to on-chain transactions. It has only been oversold like this a few times before, each time leading to a strong rally.”
Bitcoin Advanced NVT Signal Annotated Chart Source: Philip Swift/Twitter
Still, the strength of that rally may have faded, with bitcoin reversing after rising about 6 percent overnight to $51,500 on Bitstamp.
At press time, $51,000 is in focus, with commentators strongly suggesting that a new downtrend could be imminent.
Trader and analyst Pentoshi advised Twitter followers to "buy in the low to mid-$40,000s. Don't get caught."
I could see bitcoin trading back to $52,000 short term, but I think if you wait a few days/week, you'll avoid getting hacked. Buy in the low to mid-$40,000s. Don't get stuck. There's no reason to go long here. Wait for new deals to arrive.
— Pentoshi (@Pentosh1) December 6, 2021
Meanwhile, as Cointelegraph reported on Monday, there are plenty of reasons to separate bitcoin’s spot price action from its underlying strength.
These include all-time high hashrate, and a broad lack of selling — by contrast, smaller holders have been adding to their positions over the past week.
As can be seen from exchange traffic data, only whales appear to be hedging their bets.
Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.
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