Contrarian Bitcoin investors identify buying zone even as extreme fear hangs over market

Bitcoin (bitcoin) in the volatile past two weeks, the $30,000 support level has proven quite resilient, with many coins in the top 100 now showing signs of consolidation after prices bounced off recent lows.

Fear and Greed Index. Source:

Taking a contrarian view is difficult during periods of high volatility and sell-offs, and traders may consider keeping a distance from all the noise and negative news flow to focus on their core beliefs and reasons for investing in Bitcoin in the first place.

Several data points suggest that Bitcoin may be approaching a bottom, which is expected to be followed by a long period of consolidation. Let’s see what the experts have to say.

BTC may have reached ‘maximum pain’

Anonymous analyst “Root” touched on the spike in realized losses for Bitcoin holders, tweeting the following chart And said realized losses were “reaching bear market highs.”

Bitcoin realizes profit and loss.Source: Twitter

While previous bear markets have seen larger actual losses than the current ones, they also suggest that the pain may soon start to subside, which will set Bitcoin on a slow path to recovery.

The analyst also noted that “Bitcoin’s RSI is now entering a period of historically outsized investment returns over long-term investors.”

Bitcoin/USD RSI.Source: Twitter

According to Rekt Capital,

“Previous reversals in this area include January 2015, December 2018 and March 2020. All bear market bottoms.”

Strong hands hold tightly

Jurrien Timmer, global director of Fidelity Macro, provided other on-chain evidence that Bitcoin may soon recover. According to Bitcoin Dormant Traffic, this is a metric that shows Bitcoin dormant traffic, “roughly speaking, a measure of strong versus weak hands.”

Bitcoin dormant stream.Source: Twitter

Timmer said,

“Entity adjusted dormant traffic from Glassnode is now at its lowest level since the 2014 and 2018 lows.”

One indicator that a weak hand may be close to capitulation is the advanced NVT signal, which looks at the network value-to-transaction ratio (NVT) and includes standard deviation (SD) bands to identify when Bitcoin is overbought or oversold.

Advanced NVT signaling. Source: LookIntoBitcoin

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

Previous instances of NVT signals falling below the -1.2 SD level were followed by an uptick in BTC price, although it can sometimes take months to manifest.

related: Bitcoin price predictions abound as traders eye next BTC halving cycle

Hash rate hits all-time high

In addition to complex on-chain metrics, there are several other factors that suggest Bitcoin may be gaining momentum in the near future.

data Data from Glassnode shows that the Bitcoin network’s hash rate is now at an all-time high, indicating that investment in the Bitcoin network has increased significantly mining infrastructure fastest growing took place in the United States.

Bitcoin average hash rate and BTC price. Source: Glassnode

According to the chart above, the price of BTC has historically trended upward as the average hash rate has increased, suggesting that BTC may soon begin to rise.

Check out Google Trends for a last bit of hope data For Bitcoin, it noted a surge in search interest following the recent market downturn.

Interest in searching for Bitcoin over time.Source: Google Trends

The previous surge in Google search interest has largely coincided with a surge in Bitcoin’s price, so if fringe investors see this as an opportunity to pick up some Satoshis at a discount, BTC could see a relief rally at least in the near future.

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Every investment and trading move involves risk and you should do your own research when making a decision.