New Delhi (CoinChapter.com) — Bitcoin is in the process of bottoming out weeks after crashing from its record high near $65,000, according to an on-chain indicator.
As shared by Cole Garner, an independent market analyst, on his Twitter profile, the so-called BTFD (Buy The F’ing Dip) indicator represents the ratio of Bitcoin reserves to stablecoin reserves across all the cryptocurrency exchanges.
The ratio is represented as an oscillator between Bitcoin and stablecoin reserves in the chart above. When the ratio’s moving average slips towards 0-20 readings, bullish traders buy the Bitcoin dip. Conversely, a higher moving average approaching the upper red area reflects upon a higher selling sentiment.
Mr. Garner highlighted the impeccable accuracy of the indicator for predicting market tops and bottoms.
‘A perfect BTFD hit rate since 2019, and it just printed another buy signal.’— he said.
In other terms, a low BTFD means exchanges hold more stablecoin reserves than Bitcoin ones. So, an abundance of stablecoins in exchanges may indicate a potential Bitcoin buying interest among traders. The indicator works as a proxy for the supply/demand mechanics between BTC and USD.
In other words, a low value of the ratio forecasts bullish sentiments.
Buying the dip refers to buying an asset when its prices are low.
Bitcoin Price Trends
Business intelligence company MicroStrategy’s announced it will raise $1.5 billion for “general corporate purposes, including the acquisition of Bitcoin.” The announcement came hours after the firm published a press release that said it would use the proceeds from a private offering, approximately $488 million, to acquire additional bitcoin.
These announcements followed praise from billionaire hedge fund manager Paul Tudor Jones, who said he would go all-in on crypto and commodities in light of the rising inflation in the US.
Tesla CEO Elon Musk also provided bullish fuel to BTC with a tweet. The billionaire entrepreneur affirmed that Tesla will accept Bitcoins as payment when about half the power used in mining comes from renewable sources.
Buoyed by these updates, Bitcoin breached the $40,000 mark on Monday, up by 12.53% from Sunday’s opening level of $35,828. As of now, BTC has created a new support level at the price point.
Bitcoin prices moved above the 200-Day Moving Average line(blue) on the four-hour chart, indicating an upward rally.
Also noteworthy is the 50-Day four-hour moving average line rising upwards. It may form a golden cross shortly if the uptrend continues. A golden cross occurs when a short-term moving average crosses above a long-term moving average. It indicates the possibility of a bullish uptrend.
At the time of writing, BTC was trading at $40,305.
All the indicators and analysts seem to be agreeing on one thing – it is time to buy the EFFING dip.