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3 Metrics To Check Before Buying Bitcoin

Today, I present my way of investing in Bitcoin using the website look-into-bitcoin. I present 3 Bitcoin metrics that I look at before clicking on “BUY”.

Ledger Wallet

1. Technical analysis: logarithmic growth curves

The logarithmic growth curves are a way to determine if the price of Bitcoin is “statistically” undervalued:

When the price is under the “MidDev” yellow line (“fair” value), I consider it as a good time to buy.

2. On-chain analysis: 1-year HODL wave

This is the chart of how many wallets have been holding Bitcoin for more than 1 year without selling:

As you can see, each time the number of hodlers is going up, the price goes up with a delay. When this indicator goes up, I consider that it’s another good time to buy.

3. Stock-2-flow analysis: a commodity point of view

Stock-2-flow from planB is a model considering Bitcoin as a commodity. I’ve talked about it last year in this article. It’s estimating the Bitcoin price by analyzing its scarcity based on how many Bitcoin are released a year in comparison to how many are still blocked:

When the price is under the red line (price estimation based on stock/flow): I consider that it’s yet another good time to buy.

4. Conclusion

I’ve presented 3 metrics that I use when buying Bitcoin: statistical, on-chain and based on stock-to-flow. To have a certain degree of serenity and minimize the risk, I consider it’s best when the 3 indicators are flashing “BUY” altogether.

Oh. Wait. It’s the case now. Guess what I’m doing now on my favourite exchange ;-).

See you for the next article.
Until then… Take care.
Clem

Disclaimer: this is not financial advice

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