Bitcoin is always an attractive asset for investors looking to make a profit. However, the volatility of the crypto market has made investing in any asset here risky and will continue to do so.
Fortunately, when it comes to Bitcoin, there are a few ways to understand and combat this risk. Some of them are highlighted below, and you understand how to make this process more secure.
How risky is Bitcoin?
The 200-day moving average, also known as the Mayer Multiple, is the first signal here that tells us whether the market is overstretched or not. An overstretched market shows us how far the price is from its long-term trend.
If we look at the chart, we can understand that the current value of the 200-day moving average – 1.22 is falling in the middle, indicating that everything is fine. If the values had been higher, one could say that the market is running hot.
Second, we can look at investor behavior to understand the secondary factor in a successful market. There had been constant accumulation among investors over the past month.
And they weren’t small investors either. Addresses holding between 100 and 1000 Bitcoin saw the greatest growth, as their numbers rose by 202 addresses in 14 days.
At an average of 101 BTC, each of these addresses is worth nearly $ 5.7 million cumulatively. This equates to an inflow of over $ 1.11 billion into Bitcoin.
In the meantime, however, the accumulation trend has calmed down and there is currently a significantly lower demand for BTC.
Investing in times of lower demand and higher supply is generally considered a risky situation and should be avoided.
So is it really risky to invest now?
In fact, it is not, because despite lower demand, the owners maintain the relationship between supply and demand. While there is a good opportunity right now for them to sell and take profits with the MVRV at a 5 month high, they will not.
The reason for the lack of sales is that there is currently practically no pressure to sell. The market is neither susceptible to price losses nor has it made record highs. So HODLers will continue to operate HODL.
Taking all aspects into account, Bitcoin is currently not risky overall for new investors.