• Onchain Edge
  • Posts
  • #072 - Onchain Edge Index: Your Profit-Taking Guide

#072 - Onchain Edge Index: Your Profit-Taking Guide

A hightimeframe look at the crypto market, onchain edge index new charts

Author

Kierin M
November 07, 2024

While the market is in boring mode I will be switching the newsletter to a bi-monthly version. That means two newsletter each month or when I have something interesting to share. When the market picks up I will switch back.

Kierin

📊 Onchain Edge Index: Your Profit-Taking Guide

Current Onchain Edge Index: 40.98 | Market Status: Medium

🎯 TL;DR

The Onchain Edge Index helps you make systematic buying and selling decisions based on market phases. During bear markets, capital is deployed slowly for over 12 months. In bull markets, take profits more aggressively over shorter 3-month periods.

Learning from the 2017 Rally

Learning from the 2021 Rally

The 2021 Bitcoin rally demonstrates perfectly why following systematic signals matters more than emotions. Here's how it played out:

Blue triangles are buy signals orange/red triangles are sell signals 2020-2022

Buying Phase

  • Multiple buy signals appeared below $6,000 (ranging from $3,300 to $5,000)

  • First sell signals triggere around $28,000—a 8x increase (10x with higher signals)

  • Sell signals continued through the rally up to $62,000

first sell signal

The Deadcat bounce Second Peak

Here's where a lot of traders got trapped: This is an important caveat for the tool. Even though BTC surged again in late 2021, many people thought this was a continuation of the bullrun, and we would break all-time high again. What’s more, the on-chain data showed new sell signals.

Keep this in mind during the next rally. The hardest part is being patient and controlling your emotions. The dead cat bounce was brutal, trapping many retail traders chasing new highs.

The 2022 Bear market

Patience proved crucial as:

  • Buy signals appeared at various levels

  • Opportunities emerged as low as $16,000

  • Those who followed initial sell signals preserved capital

The Onchain Edge Index Buy/Sell Framework

I've developed a systematic approach based on market phases:

Here’s a sneak peak. It’s not available yet but will be available on the new onchain edge website.

Bear Market Strategy Example (12-Month Phase)

  • Weekly Buy Target: 1.67% of cash position

  • At DCA -2: Double your base amount

  • Example: $10,000 cash = $167 weekly base buy

Bull Market Strategy (3-Month Phase)

  • Base Sell Rate: 6.67% of BTC position

  • At DCA +0.5: Sell 3.33% of holdings

  • At DCA +1.5/+2.5: Increase selling percentage

How to Use It:

  1. Enter your total position size

  2. Input current Onchain Edge Index reading

  3. System calculates recommended action size

  4. Adjust based on your risk tolerance

Looking Forward

The calculator will be released soon with:

  • Custom position inputs

  • Automated calculations

  • DCA weighting adjustments

  • Market phase detection

Stay systematic,

Kierin

P.S. - Bear markets give you time to accumulate, but bull markets require quick action. The Onchain Edge Index and calculator help you stay disciplined through both phases.

P.S this is the 2017 bull run chart

Access the Daily Onchain Onchain Edge Index Alert Bot Free

I’ve removed the referral restriction to the Bot

You can access it here: https://t.me/onchain_edge_index

Please share and retweet the thread below!