Contrasting Bitcoin Investors Determine Buying Zones Even When Extreme Fear Dominates the Market

Bitcoin (BTC) support at the $30,000 level has proven to be very resilient amid the turmoil of the past two weeks with several coins in the top 100 now showing signs of consolidation after prices bounced off recent lows.

Fear and Greed Index. Source: Alternative.me

During high volatility and selling, it is difficult to take a conflicting viewpoint and traders may consider putting some distance from all the noise and negative news flow to focus on their fundamental convictions and the reason to invest in bitcoin in the first place.

Several data points indicate that Bitcoin may approach the bottom, which is expected to be followed by a long period of consolidation. Let’s take a look at what the experts say.

BTC may have already reached ‘maximum pain’

The sudden rise in losses realized by bitcoin owners was touched upon by the pseudonymous “root” analyst who tweeted the following: Schedule He said the realized losses are “reaching the tops of the bear market.”

Bitcoin made profit/loss. Source: Twitter

While previous bear markets have seen a greater level of realized losses than there is currently, they also suggest that the pain may soon begin to subside, allowing Bitcoin to begin the slow path of recovery.

The analysts also noted that “Bitcoin’s RSI is now entering a period that is historically ahead of huge returns on investment for long-term investors.”

Relative Strength Index for bitcoin/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 holding strong

Jurrien Timmer, Global Head of Macro at Fidelity, provided additional evidence on the chain that Bitcoin may see a rebound soon. According to Bitcoin Dormancy Flow, a metric that displays the quiescent flow of bitcoin which “in a rough sense is a measure of strong hands versus weak hands”.

Bitcoin slumber stream. Source: Twitter

Timer said,

“Glassnode’s modified sleep flow is now at its lowest since the 2014 and 2018 lows.”

One metric that indicates weak hands may be close to giving up is the advanced NVT signal, which looks at the network’s value to transactions ratio (NVT) and includes standard deviation (SD) ranges to determine when bitcoin is overbought or oversold.

Advanced NVT signal. Source: LookIntoBitcoin

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

Previous instances of the NVT signal dropping below the -1.2 SD level were followed by increases in the price of BTC, although it can sometimes take several months to appear.

Related: Bitcoin price predictions abound as traders focus on the next Bitcoin halving cycle

Hash rate reaches a new all-time high

Aside from the complex on-chain metrics, there are many other factors that indicate that Bitcoin could see momentum in the near future.

Data from Glassnode shows that the Bitcoin network hash rate is now at an all-time high, indicating a significant increase in investment in mining infrastructure with the largest growth occurring in the US.

Bitcoin stands for hash rate against the price of BTC. Source: Glassnode

Based on the above chart, BTC price has historically trended higher along with average hash rate increases, indicating that BTC could soon embark on an upward trend.

One last piece of hope can be found by looking at Google Trends data for Bitcoin, which indicates a surge in research interest after the recent market downturn.

Interest in researching Bitcoin over time. Source: Google Trends

Previous spikes in interest in Google searches have largely coincided with the bitcoin price increase, so it’s possible that BTC will see at least a comfortable bounce in the near future if marginal investors see this as an opportunity to get some Satoshis at a discount.

The opinions 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 risks, you should do your own research when making a decision.