Successfully predicted three rounds of BTC bear market, and the "red alert" was sounded again after 18 months

On June 27, BTC quotes on many exchanges once touched the 14,000 integer line, and then the market rebounded rapidly, closing below 12,000 on the same day, and thus began a sideways trend that has lasted for two weeks. As of the time of writing, the market has still not found an opportunity to break the deadlock. At the same time, as the operating space continues to narrow, BTC's long and short tendencies in the short term have become increasingly blurred.

However, when further analyzing the BTC market, the author discovered a very dangerous topping signal.

As shown in the above figure, since 2013, the MFI indicator (Money Flow Index) in the weekly chart of BTCUSD on the Bitstamp exchange has only shown 8 clear overbought signals; the NVT indicator has given 6 overbought bearish signals in the same period; and the RSI indicator in the same period has given a relatively large number of overbought signals.

However, if we look at these three indicators together, the frequency of the three giving real resonant bearish signals in the past six years is actually very low. As of the time of writing, the three major indicators in the true sense have only given bearish signals simultaneously four times in six years. Excluding the "occurring" simultaneous bearish signals of the indicators, after the first three similar signals appeared, the BTC price experienced an astonishing drop of 73%, 87% and 84% respectively during the correction process after the bearish signals appeared . This historical performance has undoubtedly greatly increased the possibility of BTC reaching a weekly peak.

If the current high of $14,000 is used as the forecast, the potential correction in the future may cause the BTC price to fall back to around $3,000 , and the expected low point will occur between the end of this year and the end of 2020. Considering that the overbought condition of the NVT indicator after the recent surge is even more extreme than the bull market at the end of 2017, it is possible that the market may surpass the 2018 bear market in terms of intensity and duration in the potential downward trend in the future.

As the MFI indicator almost touched the overbought critical line of 80 after the close of last week's weekly line , the system composed of these three indicators has actually given a preliminary signal of medium- and long-term topping. As far as the signals given at the indicator level are concerned, the demand for reducing medium- and long-term long positions can no longer be ignored.

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The RSI indicator is widely used and no explanation of the term is given here.

MFI indicator (Money Flow Index): It can also be called the money flow index. It is actually a modified RSI. RSI is based on the transaction price; MFI indicator combines price and volume and takes them into comprehensive consideration. It can be said that MFI indicator is the RSI indicator of transaction volume.

NVT (Network Value to Transactions Ratio) is the ratio of total market value to daily on-chain transaction volume. On-chain transaction volume refers to the transfers that occur on the Bitcoin blockchain, not the transaction volume of the exchange. Therefore, the exchange's volume manipulation has no impact on this data.

As for the individual application methods of the above three indicators and some detailed "design concepts", they will not be elaborated due to space limitations.

Source: Simplified Coin Market (Scallion Blockchain)