Is there any good news from yesterday's sell-off? It would appear so.
To begin, according to most Fear and Greed Indexes, we are no longer in the "Extreme Greed" portion. Below you can see the CMC index.
This signals that now might be a good time to start some dip buying if you believe the market bull run is likely to continue.
Image depicting the CMC Fear and Greed Index at 69 -- firmly outside of the 80+ "Extreme Greed" zone.
Next, the Bitcoin Sell-Side Risk Ratio suggests that, even for $BTC, we have not entered a phase where the price has risen too much, too quickly.
This is calculated by summing profits and losses on-chain and dividing those by realized profits -- essentially capturing whether too many holders are in profit.
The blue line indicates when the "extreme profit" phase is reached, while the red line indicates "seller exhaustion." According to this metric, we are currently in a good position.
Image of $BTC Sell-Side Risk Ratio depicting current levels in the acceptable range.
The Fed's "hawkish cut" hammered altcoins. As a result, the CMC Altcoin Season Index reads 51 out of 100, which indicates a slightly positive position in favor of alts.
Most of the recent gains for alts happened when this index was not reading positively in favor of alts. This reset again indicates a buying opportunity for the intrepid.
That brings me to my final point about timing. While there are bargains on the table, I would still wait a day or two.
The 25 Delta Skew on $BTC indicates whether options traders are too optimistic or pessimistic. If it reads greater than 10%, this is historically followed by a decline in $BTC's price.
It currently stands at 12.3%, with traders betting on a rebound. If past history is any indication, that is a crowded trade and unlikely to do well.
Image of the $BTC 25 Delta Skew, which read 12.3% currently.
In sum: if you have cash on the sidelines, now is the time to consider buying. BUT too many people hold that view specifically today.
I'd wait at least one day more before pulling out the crypto shopping cart.
Happy Trading!
-Sebastian Purcell, PhD
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