According to CryptoQuant, reserve risk indicators are essential tools for investors to gauge the confidence of long-term holders of Bitcoin. These indicators provide insight into the confidence levels in relation to the current price of the cryptocurrency. Key metrics such as VOCD, MVOCD, and Signal are used in this composite chart to help investors make well-informed investment decisions.
Reserve Risk Indicators: A Guide for Bitcoin Investors
Research indicates that periods of low Reserve Risk have historically resulted in significant returns, highlighting the importance of assessing market sentiment and investor behavior. This analysis by @joao_wedson underscores the value of these indicators in guiding investment decisions.
VOCD and MVOCD Metrics: Essential for Bitcoin Investment Strategies
When evaluating Reserve Risk, metrics such as BDDs and ABDDs are utilized to account for Bitcoin’s circulating supply. VOCD (Value of Coin Days Destroyed) is calculated by multiplying the daily BTC price by Adjusted BDD, while MVOCD represents the median of VOCD to minimize fluctuations. These metrics reflect the growing confidence of holders and aid in determining potential risks and rewards.
Historical data demonstrates that periods of low Reserve Risk have typically led to higher returns, making it a crucial factor in analyzing market sentiment and behavior.
MVOCD Signals Bitcoin Resistance at $73,800
A rise in MVOCD above the price of Bitcoin signals resistance and the formation of local tops in the market. The latest bearish signal was identified from late March to early April 2024, yet Bitcoin has not surpassed its previous all-time highs.
Previous instances of bearish signals were observed in 2017 and early 2018, as well as in 2021 before reaching a new record high. While these metrics are valuable indicators, achieving new all-time highs depends on the actions of long-term investors. The current maximum price target for 2024 stands at $73,800.
Tags: BTC.