10 tradingview Bitcoin indicators  I think you should know

10 tradingview Bitcoin indicators I think you should know!

By DutchCryptoDad | DutchCryptoDad | 21 Apr 2022


 are always present in the market, don’t get yourself rekt but stay sane and make a plan (and stick to it)! 

This blog post is complementary to my youtube video on the 10 indicators you should know to keep FOMO and FUD abay and stay sane, make a plan (and stick to it)! 

These indicators tell me when to invest in bitcoin and when to think of getting out of the market. My way of entering the market is by the method of dollar cost average. This means that I regularly  buy or sell (depending on the phase of the market cycle) small portions of bitcoin over a longer period. 

Between cycles I practise my patience, sit on my hands and have a life ;-)

Simple moving averages

This should not be a surprise, but watching the moving averages of Bitcoin tell a lot about the phase this market is in. The most important moving averages I think are the 20 , 50 and 200 day moving averages. But do not be afraid to try find your own specific best averages.

The other thing about moving averages is that almost everybody watches them so when the price of bitcoin crosses a certain line, everybody sees this and will probably act upon it. Therefore creating a self fulfilling prophecy on these events.

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As you can see from this chart, the 20 and 50 day moving averages act like a short term and medium term support. The 200 moving average acts more like a bull / bear market indicator. If the price is above the 200 sma, then it is considered a bullish market.

When the price is below the 200 sma, then the market is considered bearish.

The Mayer multiple

The second indicator I regularly use is the Mayer multiple. 

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The mayer multiple is an indicator that was developed by a bitcoin enthusiast Trace Mayer. With this indicator you can check for bitcoin overbought and oversold conditions. During oversold conditions there are good opportunities to dollar cost average in and buy bitcoin. 

But when the price of bitcoin is overbought, then it is a good time to dollar cost average out and take profits.

The mayer multiple is calculated by dividing the current price of bitcoin by its 200 day moving average. 

When the outcome is 1, then the price of bitcoin is the same as the 200 day moving average. When the mayer multiple is lower than 0, and especially lower than 0.7, then investing in bitcoin by dollar cost averaging into a position could be profitable over time.

However when the calculator is higher than 1, and especially higher than 2.4, then this indicates that the market is overbought and a retracement to the 200 moving average is bound to happen. Here you want to dollar cost average out of the asset and take profit.

There are two ways of showing the Mayer multiple in Tradingview. The first one is using a subchart with a calculation of the Mayer multiple and two lines that indicate the buy and sell regions.

The second way to show the Mayer multiple is to use an overlay on the bitcoin price and see where the price of bitcoin is higher than the Mayer multiple. This line is actually the 200 day moving average times 2.4. My personal preference is actually plotting it on the main chart to give it an idea of resistance or support. But it is totally up to you how you want to show it.

More information:

Network Value to Transactions Ratio (NVT)

The third indicator I often use is the network value to transactions ratio which is created by the well known bitcoin analyst Willy Woo.

This ratio also indicates if the bitcoin price is undervalued or overvalued. When undervalued, you have buy opportunities and DCA-ing in is a good option. When the price is overvalued, then there is opportunity to take profit and DCA out of the asset. 

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The NVT is a calculation of the marketcap of bitcoin divided by the daily on-chain transaction volume. If the price of bitcoin rises against the on-chain volume, then the NTV signal rises and vice versa. The added moving average can have the additional function of giving buy and sell signals. Also there are two value levels added to the indicator. One that indicates buy signal level and one that signals a sell level.

So when the NVT gets below the buy level, you could start DCA into bitcoin. And when the NVT gets over the sell level, you could DCA out to lock in profits.

Additional NV information:

Bitcoin Hash Ribbons

The next chart I consult regularly is the bitcoin hash ribbons chart to look out for bitcoin price bottoms.

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This indicator makes use of two calculations of the hash rate. The first calculation is an average of the bitcoin hash rate, which is the computing power to mine bitcoin blocks, over 30 days and the second calculation is the 60 day moving average of the hash rate.

This indicator makes use of the knowledge that miner participation to the bitcoin network actually has some form of predictive value. 

When the price drops, miners usually do not give up on mining bitcoin until the moment they can not make any profit anymore. At that moment the 30 day hash rate average will cross the 60 day moving average and a miner capitulation signal will flash on the indicator. 

Most of the time this signal actually indicates that the bottom for the bitcoin price is in. But beware that prices can go down further though. This signal can also be interpreted as the moment where you, and you might have guessed it, can DCA in and start to buy bitcoin. When the price of bitcoin rises and miners start to add their nodes to the network again to compete for block rewards. 

The hashrate goes up again and at some point the 30 day moving average line will be crossing up the 60 day moving average again. This is a Buy signal for people that want to be more sure that prices will probably go up further.

There is no signal in this indicator that points to price tops. For that I use the next indicator.

Additional info: 

Pi Cycle top

The Pi Cycle top is an indicator that has predicted the tops of the last three bull markets with a very high precision.

It consists of two relatively simple elements. The 111 day moving average and the 350 day moving average multiplied by two.

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Every time the 111 moving average crosses above the multiplied 350 day moving average, then a top signal occurs, which indicates that the bitcoin price has reached its top. 

That could be the moment where DCA-ing out of the asset is most profitable. You can also think about selling when the 111 moving average cones very close to the 350 moving average or you can wait for the actual signal.

The reason why this indicator is called pi cycle is that 350 divided by 111 is 3.15 which cones very close to the number pi. And for you that do not know the number pi, it is 3.14.

Additional info:

The Puell multiple

The next indicator I want to introduce is the Puell multiple indicator. It was created by David Puell. 

His thought about market bottoms and peaks comes from the miners revenue perspective. 

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The background of this indicator is that miners always feel pressure to sell their earned bitcoin. They need income to keep their infrastructure up and running. 

These miners have costs like electricity, network equipment and bandwidth costs, personnel, the mining equipment, the buildings and much more. And all that stuff is paid by selling the bitcoins they mine. 

Now the value of the bitcoin they sell on a daily base is called the miners revenue.

Puell compared this daily value over the average value from the last year and the indicator he got from this was eventually called the Puell multiple.

The interpretation of this indicator is as follows. If the price of bitcoin is high, then the daily revenue of miners is also high in comparison to its 365 day moving average. And there is no big selling pressure on these miners to cover their costs. You can say that at these moments demand is high and supply of fresh bitcoins on the market gets low, so this could lead to even higher prices.

There can also be moments when the price of bitcoin gets so low that the selling of one bitcoin does not cover the costs of the miners. So at that moment miners need to sell more bitcoin to cover their costs. 

At these moments miners could even dump their coins on the market to cover their costs,  therefore creating more supply than demand. And at these moments prices could even get lower.

To detect when revenue gets too high or too low in comparison to its 365 moving average the Puell multiple uses two additional bands. An upper band that indicates that miner revenue gets dangerously high in comparison to its yearly average and a lower band which indicates that the revenue is too low in comparison to the average. So when the revenue is in the upper band, it could mean that the bitcoin price is too high and it is time to get cautious and maybe try to DCA out of your position.

When the price enters the lower band, then you could say that prices are getting too low and it is time to slowly invest in bitcoin. From that moment on it is time to sit on your hands and wait for the indicator to get info its upper band to sell again.

Tradingview indicators:

Additional info:

The fear and greed index

I Think that fear and greed index is based on Warren Buffet’s saying: “ be fearful when others are greedy, and greedy when others are fearful.”. 

The Bitcoin fear and greed index is traditionally a combination of other indicators like volatility, market momentum, surveys, social media and even the google trend index. However check the tradingview indicator for the actual indicator that are used to calculate the graph.

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Now, this indicator ranges from 0, which is extreme fear, to 100, which is extreme greed. 

The whole point of this index is to detect where the market becomes so full of fear that it is highly likely that a market bottom will be formed around that time. Then it is time to think about investing in the market. The same goes for the greed phase where a lot of retail and investor fomo is present. Then it is time to think about taking profits and slowly exiting the market.

Just like every other indicator, the fear and greed index does not guarantee that markets will go up after the fear phase. It is likely and probable but not certain.

This also counts for the greed phase. Greed could last a long time and markets can go parabolic during these phases. So use this combination with other tools in your toolbox to make the correct investment decisions.

More information:

Bitcoin Market Cap gained per dollar

Another indicator I consult to make out if we are at a bottom of top is the Bitcoin market cap gained per dollar indicator. I have no source on how this indicator is actually calculated and the tradingview pine code is not shown. However the idea behind this indicator is the market cycle from accumulation phase to a distribution phase. The accumulation phase happens at the bottom of the market cycle and distribution at the top of the cycle.

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During this distribution phase there is more demand for bitcoin than supply and prices could go parabolic. However wise investors should think about selling their bitcoin at that time to lock in profits and wait for the new cycle to invest.

So every time the blue indicator line touches the bottom band, which also happens to be fibonacci lines, it indicates that accumulation of bitcoin could be a wise decision. Especially when the green 200 moving average of the indicator also is below the orange total average line.

If the blue indicator line is near or touches the upper band, then the distribution phase is at its peak and the market cycle top is near. Slowly DCAing out of the asset over time could be a wise decision.

More information:

The Golden ratio multiplier

The last two indicators of this video are more helpful to find boundaries or support and resistance.

The golden ratio multiplier uses the 350 day moving average as the base for the other trendlines. The original author uses this moving average to determine if there is a bull or a bear market. You may recognize this moving average with the pi cycle top indicator where it is also used.

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Then fibonacci calculations are added to the 350 dma to draw new lines that imply support and resistance for the bitcoin price. 

So the indicator draws other lines that are calculations of the 350 DMA like:

  • 1.168 times the 350 dma
  • 2 times the 350 dma
  • 5 times the 350 dma
  • Etcetera

Also the band has lines that are a result of the 350 dma divided by fibonacci numbers like

  • 350 dma divided by 1.414
  • 350 dma divided by 1.618
  • 350 dma divided by 2.414
  • Etcetera

When the price of Bitcoin is below the 350 divided by 2 line, the grey area, then this indicates a new buying opportunity and time should be right to DCA into the asset once again.

And as you can see, i would not be surprised if the price of bitcoin would dip into the grey area one more time before we finish this bull run. That could be that we see prices of the previous market cycle top one more time before we head off to new all time highs….

Additional info:

The logarithmic growth curves

Just like the golden ratio multiplier, the logarithmic growth curves form a band around the bitcoin price to show lines of support and resistance.  The growth curve is calculated with the historical price data and the log growth function to calculate a logarithmic median line of the bitcoin price. The upper line represents the top range of a bull cycle and the lower band represents the lower regions of a bear market. The middle line is the median of the top and bottom.

You can draw the lines in between with the help of multiplying with fibonacci numbers, just as in the golden ratio multiplier and they all act as support of resistance lines.

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Use of this indicator is also pretty straight forward:

You have to know that bitcoin has market cycles where the price ranges from the bottom to the top of the cycle and back. 

When the price is in the lower bands, bitcoin is in its bearish phase of the cycle and investment in bitcoin could be a good opportunity for the future. On the other hand, when bitcoin is in the top of the cycle, prices are probably in the high bands and exiting the market with profit could be a great decision.

The other advantage of this indicator is that you can project the top, median and bottom into the future to predict what the price range of bitcoin will be. So this way the indicator also helps you with dreaming to become a crypto millionaire. 

More information:

End

 

So there it is, 10 indicators that you can use to determine in which state of phase bitcoin is and how to act on it.

It’s important to have a plan in place and act upon it under the correct circumstances.

There’s nothing to stop you from investigating which of these indicators will suit you the best.  Also think about combinations of indicators. 

By doing this, you can get different perspectives from the market and see in one glance which phase  bitcoin is at the moment. Hopefully you then can make the right investment decisions and get profit from the market.

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DutchCryptoDad
DutchCryptoDad

I'm just a regular Dutch dad with a passion for crypto, trading, technology and learning. This channel is my personal journey into the world of Crypto, blockchain, programming, trading bots, trading strategies, NFT's, Defi and many things more.


DutchCryptoDad
DutchCryptoDad

I'm just a regular Dutch dad with a passion for crypto, trading, technology and learning. This blog is my personal journey into the world of Crypto, blockchain, programming, trading bots, trading strategies, NFT's, Defi and many things more related to digital assets. I want to share my knowledge with others to help them as well in this vast world of digital assets.

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