Advanced NVT was already hinting that Bitcoin was “seriously cheap,” but has now printed a rare buy flag.
A Bitcoin (BTC) price metric which made BTC â€œlook seriously cheapâ€ at $56,000 is now in rare oversold territory.
In a tweet on Dec. 6, Philip Swift, Philip Swift, creator of analytics platform LookIntoBitcoin, returned to potentially bullish signals coming from Bitcoinâ€™s Advanced NVT Signal.
Advanced NVT deflates in Bitcoin price rout
Advanced NVT calculates whether Bitcoin is overbought or oversold at a certain price point using market capitalization and network volume.
In late November, when BTC/USD had already fallen to $56,000, Swift suggested that a bounce was due.
The metric subsequently continued to fall in line with spot price thanks to last Fridayâ€™s liquidation cascade. A possible plus, however, lies in the return of â€œoversoldâ€ cues from NVT â€” something which has only occurred six times since 2015.
â€œA lot of fear in the market currently, which makes me bullish. Lots of indicators suggest we are near a bottom,â€ he said.
â€œAdvanced NVT Signal looks at price relative to onchain transactions. It has only been this oversold a few times before, each time resulting in a strong bounce.â€
The strength of such a bounce nonetheless may have already faded, with Bitcoin reversing after around 6% overnight gains to $51,500 on Bitstamp.
Trader to BTC buyers: Wait a week to “avoid chop”
At press time, $51,000 formed a focus, amid heavy indications from commentators that fresh downside could soon enter.
Related:Â Bitcoin could ‘drive people nuts’ for months with $53K BTC price ceiling â€” analyst
â€œBuy in low to mid 40’s. Not get trapped,â€ trader and analyst Pentoshi advised Twitter followers.
I can see $BTC short term trading back towards 52k but I think if you wait a few days/week you’ll avoid chop. Buy in low to mid 40’s. Not get trapped. Don’t see a reason to take new longs here atm. Going to wait for a new trade to come to me pic.twitter.com/NS7J0PainD
â€” Pentoshi (@Pentosh1) December 6, 2021
As Cointelegraph reported Monday, meanwhile, there are plenty of reasons to separate spot price action from underlying strength in Bitcoin.
Among them is all-time high hash rate, along with a broad lack of selling â€” smaller hodlers, by contrast, have been adding to their positions throughout the past week.
Only whales appear to be hedging their bets, as evidenced by exchange flow data.