Contrarian Bitcoin investors identify buy zones even as extreme fear grips the market

Bitcoin (BTC), despite the turmoil in the last two weeks, has shown resilience with many tokens within the top 100 showing signs of consolidation. Prices have bounced back from their previous lows.

Fear & Greed Index. Source:

It’s hard to be a contrarian during high volatility and selloffs. Traders might think about putting aside all the negative news-flow and noise to keep their eyes on their core beliefs and why they originally invested in Bitcoin.

Numerous data points indicate that Bitcoin may be nearing a bottom. This will be followed by a long period of consolidation. Let’s look at what experts have to say.

BTC might have reached “max pain” already

The Bitcoin holders realized losses spike was noted by “Root”, a pseudonymous analyst, who tweeted the following chart. He said realized losses were “reaching bear markets highs”.

Bitcoin made profit or lost. Source: Twitter

Although bear markets in the past have had higher realized losses than they are now, these indicators suggest that the pain may soon subside which could allow Bitcoin to start the slow road to recovery.

Analysts also noted that “Bitcoin’s RSI now enters a period which has historically preceded large returns on long-term investments.”

BTC/USD RSI. Source: Twitter

Rekt Capital says so.

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

Strong hands are a guarantee of stability

Jurrien Timmer (Global Director of Macro at Fidelity), provided additional evidence that Bitcoin could soon see a revival. The Bitcoin Dormancy Flow is a metric that shows the dormancy flow of Bitcoin. It “roughly speaks to a measure the strength vs. weakness.”

Bitcoin dormancy flow. Source: Twitter

Timmer stated,

“The entity-adjusted Dormancy flow from Glassnode has dropped to its lowest level since the lows of 2014 and 2018.

Advanced NVT signals are a metric that indicates that weak hands might be close to capitulation. They look at the Network Valu to Transactions Ratio and include standard deviation (SD) bands. This allows you to determine when Bitcoin is either overbought (or oversold).

Advanced NVT signal. Source: LookIntoBitcoin

The chart shows that the advanced NVT signal, highlighted in lightblue, is now greater than 1.2 standard deviations lower than the mean. This suggests that Bitcoin is currently too oversold.

Historically, when the NVT signal fell below the -1.2 SD level, it was followed by an increase in the price for BTC. However, this can sometimes take many months to manifest.

Related: Bitcoin price predictions as traders concentrate on next BTC halving cycles

The hash rate reaches a new record high

There are many other factors that could suggest Bitcoin will see an increase in momentum, aside from the complex on-chain metrics.

Glassnode data shows that hashrate for Bitcoin is at an all-time high. This indicates that there has been a significant increase in investments in mining infrastructure, with the greatest growth occurring in the United States.

Bitcoin mean hash rate vs. BTC price. Glassnode

The chart shows that the price of Bitcoin has trended higher in the past, along with increases in the average hash rate. This suggests that BTC may soon be on an upwards trajectory.

The Google Trends data on Bitcoin offers one last hope. It shows a spike of search interest after the recent market crash.

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

Google searches have seen an increase in interest in Bitcoin in the past. It’s possible that BTC will see a slight rebound in the near future, if investors who aren’t already invested see this as an opportunity for them to grab some Satoshis at a discounted price.

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Eileen Wilson

Eileen Wilson –Technology and Energy My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.

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