Bitcoin is down nearly 50% from its May ATH and fears that the coin will get caught in a bear market continues to grow. However, some people view the drop in prices as an opportunity to buy as much bitcoin as possible. While the strategy is solid, the important question is when to buy. The popular analyst Rekt Capital answered this question with the help of Puell Multiple.
Puell Multiple (P-Multiple) is a data science indicator that shows periods of oversized potential returns for investing in a coin when it is undervalued. It highlights the area that preceded great buying opportunities for Bitcoin. If the indicator has been in the undervalued territory in the past, then the price movement of the coin is usually in consolidation.
In the entire history of Bitcoin, P-Multiple has hit the undervalued zone five times, including the current decline.
The blue boxes on the chart indicate the initial low, which is not directly related to the coin’s fall in price. It is the second low point that sets the price of Bitcoin. Every time P-Multiple hits the green zones, the price drops to the bottom of the market and consolidates for a while. Except for 2020 and possibly this time too.
The red box on the chart shows the crash of 2020, but the yellow box represents the actual decline into the undervalued green. This marked the first time in history that the coin consolidated at the market high rather than the low. Even with the P-multiple or the price, we are not yet at the bottom. We could go further down and the price would follow suit.
Best buying opportunity
The better way to find the right time to buy bitcoin that would be financially beneficial would be by observing the higher low trend line of the best fit. The blue line shows the range of all bottoms that P-Multiple has ever made. Touching this line has usually resulted in the sharpest decline, even more so when there is a downward deviation like in 2018. Right now this floor is far from the line of best fit. Rekt Capital stated,
“If we deviate below the best-fit line, that would be the biggest, the best opportunity [to buy]”(Sic)
Since the first visit to the green area doesn’t reflect Bitcoin’s floor price, it would only make sense to wait now. If P-multiple hits the blue trendline, the price of the king coin could potentially consolidate in the higher ranges. This would be the best buying opportunity for Bitcoin.
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