Bitcoin (BTC) investors are staying away from the market, feeling disheartened, according to well-known analyst Philip Swift.
In a tweet on December 14th, the co-founder of DecenTrader signaled that there could be high-risk returns for BTC at current price levels.
Swift: Loss of Excitement Due to Bitcoin’s Bear Market
BTC/USD is currently about 70% lower than its previous all-time highs, leading to the exit of many short-term investors.
The FTX controversy accelerated the market decline, causing more distress as anxious investors react to the aftermath.
For Swift, the disappearance of investor “euphoria” can be seen through the HODL Waves metric, which tracks the movement of coins by age, indicating whether they are held short-term or long-term.
Another version of the metric, Realized Cap HODL (RHODL) Waves, categorizes coins based on their realized price, showing the cost basis of bitcoins inactive in wallets for different durations.
“RHODL waves provide insights into the cost basis of long-held coins,” explains Swift on his platform LookIntoBitcoin.
Currently, RHODL indicates that only a small portion of coins are quickly moving in the network after being used in previous transactions, with transactions mainly involving coins that were last moved 6-12 months ago.
The color intensity of the waves in the chart indicates the recency of the coin movements.
“Euphoria among Bitcoin investors has faded completely,” remarked Swift, suggesting that the risk-reward ratio for investment is highly favorable, based on historical data from RHODL Waves.
“High intensity colors in Realized Cap HODL Waves represent periods of euphoria,” he commented:
“We are currently at cycle lows, which means it is a maximum risk-reward opportunity.”
Transition from Market Despair to Asset Accumulation
Swift is not the only one observing potential bullish signals for Bitcoin as we approach the end of 2022.
In its recent newsletter, Glassnode, an analytics firm, highlighted the shift from “capitulation” to “accumulation” among BTC investors.
This change was visible through the UTXO Realized Price Density metric, a tool similar to RHODL Waves, indicating the intensity of selling based on the age of coins.
“After each market decline in 2022, there has been an increase in the redistribution and accumulation of coins,” noted Glassnode, mentioning a significant reaccumulation following the drop from $24,000 to $18,000.
A chart illustrated the investor behavior during previous BTC price peaks, notably in late 2017 and April 2021.
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