CryptoQuant: Reserve Risk Indicators Guide Bitcoin Investments

As per CryptoQuant, reserve risk indicators are key tools that help investors understand the confidence of long-term Bitcoin holders. Investors can understand the confidence in relation to its current price. These indicators include metrics like VOCD, MVOCD, and Signal. This composite chart aids in making informed investment decisions.

Reserve Risk Indicators: #Bitcoin Investor Guide

“Analysis shows that low Reserve Risk periods have historically yielded outsized returns, underscoring its relevance in assessing market sentiment and investor behavior.” – By @joao_wedson

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— CryptoQuant.com (@cryptoquant_com) June 14, 2024

VOCD and MVOCD Metrics Key to Bitcoin Investment Strategy

For Reserve Risk, the values such as BDDs and ABDDs are applied. They adjust for Bitcoin’s circulating supply. VOCD (Value of Coin Days Destroyed) is the total of daily BTC price multiplied by Adjusted BDD. Therefore, MVOCD is the median of VOCD. It reduces fluctuations in the specified parameters. These metrics are the accumulating holder confidence and are used to decide on the good risk or reward prospects.

A look at historical market data gives an insight that low Reserve Risk periods have generally produced higher returns. It makes it crucial in the evaluation of market sentiment and behaviour.

MVOCD Signals Bitcoin Resistance at $73,800

When the price of MVOCD rises above the price of Bitcoin, it indicates a resistance and formation of local tops. The final bearish signal was detected from late March to early April 2024. But so far, Bitcoin has failed to reclaim new all-time highs.

From the year 2017 to early 2018, the two bearish signals were observed. In 2021, there is another bearish signal before the record high. It is useful this set of metrics, although new all-time highs can be achieved depending on the actions of long-term investors. Now, the latest maximum of $73,800 is available for the year 2024.

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