Confluence is one of the most powerful tools in market analysis, as it helps weight the probabilities in your favour, and maximise the likelihood of returns.
Today I want to cover the possibility of a Bear to Bull transition, and some tools I am paying attention to monitor the progression. I am not seeking to pick the absolute bottom here. Instead, I seek multiple fundamental metrics, which are simultaneously signalling that a sustained and sustainable recovery is underway.
I look for confluence across four areas:
- Price breaking above key onchain and technical levels, signalling strength and psychological shifts.
- Activity increasing, demonstrating that more positive momentum in attention and usage are underway.
- Profitability improving, such that investors are making money, and top buying sellers are exhausted.
- Wealth Balance returning to a healthy dominance by HODLers AND that they are able to divest a little and not oversupply the market.
As we can see in the chart below, we as yet, do not have any of the conditions fully met. As discussed in the video, we have a couple of individual triggers hit, but for each category, there are at least two which need to be simultaneously positive before it will fire off.
In essence, we are NOT yet in a sustained nor sustainable recovery. So if you are hesitant to deploy capital, rest assured, that is a sane and sensible position to take.
This exercise is about putting the odds in our favour, and catching the meat of the bull market move. We want to be early, but not too early that we get chopped up along the way.
These types of tools are perfect for the more casual investor, or those who really just want to ride the main wave and avoid the chaotic pitfalls of bottom formation.
P.S. Please do let me know if you find this style of data visualisation, content and chart style useful. My goal is to make onchain easy to deploy and use for everyone, and is a big focus of mine in coming weeks. Your feedback helps me craft bigger and better tools and content, which ideally should make your job (making money and staying sane in Bitcoin markets) easier.
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