Author: 1912212.eth, Foresight News
In the world of trading, those who buy are merely apprentices, while those who sell are the true masters. This simple phrase encapsulates the mysterious secrets of the market. Imagine this scenario: you purchase an asset that immediately starts generating profits and continues to soar, creating substantial unrealized gains. You are ecstatic, believing that you will reach your target price and anticipating the upcoming frenzy.
Then, suddenly, the market comes to a halt. You think it’s just a temporary consolidation. But before long, it plunges again, this time with losses wiping out a significant portion of your profits.
You hesitate to sell, fearing you might miss out on more gains. But holding on results in significant losses. The brutal lesson of the market eventually unfolds as prices fall below your initial purchase price. Thinking it’s the end, the asset drops by 30%, and in desperation, you decide to buy more at the bottom, only to see it plummet by another 20%. Now, you are deeply trapped with no ammunition left. After reluctantly cutting your losses, the market slowly begins to climb again.
Failure to take profits leads to substantial profit retracement and may even culminate in losses. Every novice entering the market must go through this experience, and even some seasoned traders cannot escape the emotional pitfalls of the market.
This article focuses on interpreting the indicators for selling at the top, hoping that readers can better grasp the selling opportunities during significant market movements.
Coinbase Tops the Apple App Free Chart
As a compliant exchange in the United States, Coinbase not only has a significant impact on listings but also serves as an indicator of market sentiment and activity through its app downloads.
During the last bull market cycle, after November 2020, Coinbase climbed to the Top 100 of the Apple App Store’s free chart, reaching the Top 30 in January 2021 and even experiencing technical issues at one point.
Interestingly, nine months later, on October 28, 2021, Coinbase claimed the top spot on the free chart. At that time, the price of BTC hovered around $60,000, just ten days before it hit its peak of $69,000 on November 8.
When users flock to download Coinbase to purchase cryptocurrencies, the signs of a market top become increasingly evident.
BTC Monthly Chart Struggles to Break the 7-Month Winning Streak
Historical charts show that during a complete bull market cycle, BTC has only experienced one instance of a seven-month winning streak.
In the previous cycle, from October 2020 to March 2021, BTC displayed a favorable six-month winning streak. This cycle, benefiting from the approval of spot ETFs, BTC achieved an unprecedented seven-month winning streak.
Following this, the market began to consolidate. In this current bull market, with prices above $60,000, it will be exceptionally challenging to achieve another miraculous seven-month winning streak in the latter half of the market cycle.
BTC Unrealized Profits/Losses
This indicator measures the profitability/losses of participants in the Bitcoin network. The color progression from top to bottom includes red, orange, light yellow, gray-white, and light blue. The blue at the bottom signifies most participants cutting losses, while red at the top represents most players in profit.
When the line is in the light blue area, it usually signals the bottom of the BTC price range as participants cutting losses exit the market. Conversely, when the line is in the yellow or red area, it often indicates a market top, as many profitable players choose to take profits, leading to a cycle of peaks and troughs.
Currently, the market is at a high point in the yellow area, with approximately 52% of Bitcoin players still in an unrealized profit state.
In past cycles, the line has dipped significantly into the green area twice, signifying a majority of participants in a loss position. This cycle has only witnessed one such occurrence, and whether history will repeat itself remains to be seen.
HODL Supply
This chart observes the performance of HODL data for Bitcoin. Short-term holders are defined as those holding for less than a year, while long-term holders have held for over a year.
During a bull market peak, long-term holders tend to take profits and exit, reducing their share, while short-term holders often enter at price highs, leading to a noticeable increase in supply percentage.
In recent bull markets, long-term holders started selling in January, accelerated in February, and are still gradually exiting. Currently, the pace of their departure has slowed down.
Long-Term Trend Indicator MVRV Z-Score
This indicator, based on the total market cost, reflects the overall profitability of the market. The light red area represents MVRV, while the line graph represents Z-Score, highlighting extreme cases between market value and realized value. When the orange line touches the light red area, it signifies the market’s peak. Further, a value above 6 indicates a potential top area.
When the orange line is in the light blue area, it indicates that holders are mostly in a loss position. The current value is 2, indicating a middle ground.
Bitcoin Open Interest in Contracts
In recent months, an intriguing observation has emerged: whenever the total open interest in Bitcoin contracts reaches a historical high, it often marks a temporary price peak.
For example:
– March 4: $29 billion, BTC price $68,499
– March 13: $33.9 billion, BTC price $73,650
– March 29: $38 billion, BTC price $70,780
– June 7: $38 billion, BTC price $71,997
Contract data signifies the market’s sentiment towards future trends. When the market unanimously becomes extremely bullish in the short term, leveraging up, a correction is likely to follow to cleanse the market and pave the way for a fresh start.
In Conclusion
Apart from the indicators mentioned, assessing the market also involves considering factors such as Ethereum gas fees, social media activity, psychological price levels, among others. It is both a science and an art. Investors must comprehensively evaluate these indicators to seize opportunities in the market successfully.
