#054 - My 3 Favorite Metrics that will signal the BTC Peak

My 3 Favorite Onchain Metrics That will signal the BTC this cycle

Looking to strategically sell your Bitcoin at the next cycle top?

Cue the reddit crowd that will shout at the next cycle top that they will never sell

The three metrics can help you time the market without needing to look at the price of BTC are:

• MVRV

• NUPL

• Puell Multiple

Let’s start with MVRV

1️⃣ MVRV (Market value realized value)

This metric measures whether Bitcoin is overvalued compared to its historical average.

If MVRV exceeds 2, it indicates that the current price is much higher than what most holders paid, suggesting that we are moving towards the peak.

However, keep in mind the mvrv has exceeded 4.0 in 2021 which shows it can go much higher than expected.

You can look at the current BTC mvrv value here.

2️⃣ NUPL (Net unrealized profits and loss)

NUPL identifies the overall market sentiment by showing the proportion of Bitcoin holdings in profit or loss.

A NUPL value in the greed" zone (above 0.7) is very strongly correlated with market tops.

The higher it goes the stronger the sell signal.

You can look at the current NUPL value here.

3️⃣ Puell Multiple

This onchain metric compares the daily earnings of Bitcoin miners against the average over the past year. (view the puell multiple chart here.)

Here’s how to use the Puell Multiple:

• Puell Multiple > 2.5 = You should sell up to 25%+ of your BTC/alts on upward moves. This will give you a lot of capital to buy back during capitulation events.

• Puell Multiple > 5 = You should be selling 75%+ of your BTC portfolio. Furthermore, you must set sell orders for your altcoins, as they often pump after BTC pumps.

What about the current value?

Even though BTC is at $63k the Puell Multiple dropped to 2022 buy levels

The Puell Multiple experienced a significant drop, falling from 2.63 to 0.65 following the halving event.

What’s interesting is that the current Puell Multiple value, with Bitcoin priced at $63k, mirrors the level it was when Bitcoin stood at just $22k.

This bullish for BTC in the longterm.

4️⃣ Bonus: BTC sent to derivative exchanges

Everyone loves to gamble, from the small shrimp to the big fish.

However, it's a smart move to keep an eye on what the big fish are doing—they're often backed by the top traders in the market.

When you're looking at money flowing into derivative exchanges, it's crucial to note the average amount of BTC per transaction.

Right now, as the market takes a slight dip,

the average amount of BTC heading to derivative exchanges stands at 3.8BTC per transaction.

Whales are betting big that we are close to the bottom.

You will notice an interesting pattern if you look at the three other whales on the chart. They are good at buying the bottom.

 🔴 Onchain Edge Index sneak peak

What if you don’t have the time to spend hours looking at onchain charts and want to get a better feel of the current state of the market without looking at the price?

Don’t worry I’ve got you covered.

I’ve mentioned the onchain edge index a few times in the past and have finally managed to finish coding all the automation to update the onchain edge index on a daily basis.

Hurrah!

Below you can see the onchain edge index showing an excellent time to sell value on the 14th of March 2024 at 73k

There are many ways you can use the onchain edge index in order to accumulate more BTC throughout market cycles.

First, here are all the values with the corresponding risk (buying or selling recommendation)

Here are two easy ways you use the Onchain Edge Index to your advantage

If you want to catch the cycle and get a good average buying price, then I suggest you start dollar cost averaging with the recommended DCA factor.

Example A: DCA starts with “Good time to buy” signal <40

1. Determine an amount you are comfortable spending i.e $1’000 per week.
2. Multiply that amount by the DCA factor. Let’s say the current risk level is good time to buy ($1’000×0.5 = $500).
3. Invest $500 a week on the same day into BTC
4. If the Onchain Edge Index drops, for example <10 then you will invest with a DCA factor of 1.5 ($1’000×1.5 = $2500) per week.
5. Stop DCAing when you run out of money or the the risk level goes into Neutral territory
6. Start selling at good time to sell with the respective DCA factor.

Example B: DCA starts with “Very good time to buy”

It’s the same strategy as above but you only start buying when the Onchain Edge index points to a very good time to buy and you start selling at a very good time to sell

You will get a much better price but the risk is higher that a very good time to buy never happens.

How can I get?

I’m still thinking about what the best way is to share the Onchain Edge Index.

I have one question for you:

do you prefer access to a Google Sheets version where you can check the values yourself

or

a telegram bot that updates the onchain edge index value once a week or when there are significant changes.

Please reply to this email and let me know:
Trust me, you will succeed.