Bitcoin’s risk indicators, critical metrics that help determine its next direction BTC price have risen significantly alongside the crypto asset’s rise to several crucial levels, indicating a potential sell signal.
Risk levels for Bitcoin are rising to an all-time high
In a recent insightful reportAlpharactal, an advanced data analytics and investment platform, has highlighted that several Bitcoin metrics that measure the asset’s risk level provide important signals. These include Bitcoin reserve risk and the MVOCDD signal.
As BTC moves towards crucial resistance ranges, the increase in risk indicators simply signals a potential shift in market dynamics. It also highlights the importance of traders and investors maintaining a careful balance between excitement about future price spikes and concerns about one possible correction.
Specifically, the Reserve Risk measure calculates between the current price of the crypto asset and its confidence long term holders. While high levels reflect a greater probability of correction, low levels, the Green Quadrant on the chart, show high confidence combined with attractive prices.
Meanwhile, the MVOCDD signal, an advanced measure, warns when the market is getting closer to a peak. Additionally, the signal helps identify periods of high and low volatility by analyzing coin destruction and displaying the number of old Bitcoins being moved between crypto exchanges.
According to Alphractal, these crucial indicators reveal times of high risk or significant opportunity, making the measures essential pricing tools as they provide remarkable insight into whether Bitcoin overbought or undervalued.
The platform reported that the reserve risk indicator recently rose to a historic barrier level that points to market corrections seen in previous cycles. Also, the intense Bitcoin action has caused the MVOCCD signal to rise significantly in recent weeks, raising the possibility that BTC is overbought.
A potential parabolic move on the horizon?
Of BTCIf risk indicators rise sharply, crypto assets’ renewed upward momentum could face setbacks at various resistance levels. However, Alphractal emphasized that despite these warnings, the market has not yet reached the severe overheating levels seen at previous peaks. As a result, a future price drop may provide opportunities for purchases.
So far, the platform claims that if the Reserve Risk indicator moves out of the green quadrant in the coming months, the market could move to a parabolic phase due to previous cycle trends.
Currently, Bitcoin is showing positive movements as its value has increased by almost 2% over the past day, bringing its price to the $96,329 level. Although BTC is gradually rising today, trading volume has fallen sharply by over 32% over the same period, indicating that investor interest and confidence in the digital asset is waning.
Featured image from Unsplash, chart from Tradingview.com