4 - 6 minute read
Bitcoin has been on a rollercoaster ride over the past few years. After hitting an all-time high of $64,863 in April 2021, the cryptocurrency has experienced a significant drop in value, falling to as low as $28,321 in recent months. However, fresh analysis reveals that Bitcoin is on the road to a new bull market and should deliver serious returns in the process.
Charles Edwards, founder of Bitcoin and digital asset hedge fund Capriole Investments, flagged a “familiar” bull signal on the SLRV Ribbons metric in a tweet on April 2. SLRV Ribbons is a tool for measuring potential Bitcoin profitability, and it is based on the Short-to-Long-term Realized Value (SLRV) Ratio from well-known analyst David Puell.
The SLRV Ratio takes the percentage of the BTC supply active in the last 24 hours and compares it to that last active 6-12 months ago. The result shows how comparatively active short-term supply and long-term supply are at a given point. From this, an investor can gain insight into both sentiment and likely price trajectory, but over time, such supply values may change.
SLRV Ribbons attempts to address this by analyzing the interplay between two moving averages. When its short-term 30-day MA crosses over the long-term 150-day MA, Bitcoin is at the start of a bullish phase. The metric “is about as simple as gets” when it comes to reliable Bitcoin analytics tools, Edwards explained in an introductory blog post, and is currently repeating classic bullish behavior with a crossover taking place in early 2023.
“A new trend in SLRV ribbons, and it looks familiar,” he summarized.
While relatively new, Edwards added that SLRV Ribbons had been backtested to show both its reliability and capability to improve BTC investment returns versus buying and holding.
The Bitcoin Yardstick, previously covered by Cointelegraph, reveals a recovery in Bitcoin market cap versus hash rate but still classes BTC as “cheap” at current prices. “The Bitcoin Yardstick is painting a very familiar signature to the 2019 lows,” he commented on March 31.
After exiting the “cheap” zone early that year, BTC/USD then only saw one brief return during the March 2020 COVID-19 cross-market crash.
So, what does this mean for traders and investors? While past performance cannot guarantee future results, the SLRV Ribbons and Bitcoin Yardstick metrics suggest that Bitcoin could be on the verge of another bull run. However, it is important to remember that trading carries high risk, and no one can predict the exact future price of any asset.
If you do decide to invest in Bitcoin, it is crucial to do your research and understand the risks involved. Only invest what you can afford to lose and consider diversifying your portfolio to minimize the impact of any potential losses.
Bitcoin’s recent price movements may be reminiscent of past trends, but it is important to approach any investment with caution and careful consideration. As always, it is crucial to seek advice from a financial advisor before making any investment decisions.