- BTC has achieved higher ROI than gold and S&P 500 index but noted to be particularly uncorrelated with them.
- BTC’s volatility was 70.21% at the beginning of 2019, fell to 17.86% on April 1, climbed to 102.53% on July 20, and dropped to 32.05% at the end of December.
- The current analysis shows that the January 2020 period is an apt opportunity to enter the market.
The SFOX multi-factor market index has reported that though the crypto market remained mostly neutral through the end of 2019, the beginning of the new year has witnessed some movement from the bearish side to the bullish side of the market.
It further added that Bitcoin’s annual return of 93.80% is higher than that of gold or S&P 500. Another factor influencing buyers is the upcoming halving of Bitcoin.
After the impact of the first and the second halving on the market, the third halving expected to raise the prices of Bitcoin by more than tenfold. With all these factors involved, one might question if this is the best time to invest in Bitcoin, big data has the answers.
The SFOX multi-factor market index analyses price dynamics, market sentiment, volatility, and the continued development of the industry to determine the monthly value of the index.
This index has shown movement from slightly bearish (-1) to slightly bullish (+1) in early January. As compared to previous years, cryptocurrency ended with very low volatility (their standard deviation from the 30-day average price) in 2019.
BTC has achieved higher ROI than gold and S&P 500 index but noted to be particularly uncorrelated with them. Even though the S&P 500 outperformed Bitcoin with regards to risk-reward ratio, Bitcoin’s high returns and low volatility has added to its cause in being a useful tool for portfolio management.
This neutral rating of the crypto market is the result of various known and unknown factors, including the upcoming halving in May this year. If one observes the 30-day historical volatility of BTC and altcoins, one notices that there is a general decline in volatility at early 2019, increase in the mid months and decrease again at the end of the year.
BTC’s volatility was 70.21% at the beginning of 2019, fell to 17.86% on April 1, climbed to 102.53% on July 20, and dropped to 32.05% at the end of December, according to SFOX analysis. BSV and other coins have also experienced sharp fluctuations in BTC independence.
Therefore, as the volatility of Bitcoin reduces, its value investment attributes become essential. Under the circumstances of the upcoming halving, the investment indicators say yes to Bitcoin.
Now, let us see what technical indicators such as moving average (MA), Ultraman model (Z-score), and reserve risk model will tell us about the appropriate time to buy Bitcoin.
The MA is the average value of the price trends. Current indications on the MA chart show that we saw the best buying period between December 2018 and April 2019. However, with the third halving around the corner, another best buying period is expected to begin soon.
The Ultraman model measures the market value as a product of the current price and coins in circulation. According to data as of January 3, the Bitcoin market remains highly concentrated. The Z score enters a “green zone” when the bottom of the current market cycle has reached.
Calculations show that we are approaching a new green space. The reserve risk model indicates that soaring prices for BTC driven by new demand. The chart below shows that a green zone, like the one we are entering now, is an excellent time to hold BTC.
The current analysis shows that the January 2020 period is an apt opportunity to enter the market. However, traders must note that the market cycle not anticipated to end until 2022 and make decisions based on that.