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Video: Did Bitcoin just peak? What the Market Index is telling us.

Last Updated on October 22, 2021 by admin

Bitcoin just hit a new all-time high of around $67,000. While this is very exciting for crypto traders and investors, it can also be stress-inducing. If you have a large unrealized gain on a longer-term investment, you may wonder if it’s prudent to take profit.

After all, Bitcoin can move up very quickly, but it has had a tendency to crash just as fast. The Market Index is designed to help us get a sense of the bigger picture and manage our positions.

While Bitcoin will likely continue to go up over the long haul, it’s very possible we’ll see a drop at some point. Markets move in cycles. It’s even possible we’ll see a slump that lasts for a year or more. If price does go down to $28K-$30K, it would be great if you could sell some or all of your position now, then begin buying back in at that lower level.

In this 11-minute video, I’ll cover:

  1. What the Market Index is telling us.
  2. A simple simulation of using the Market Index to make long-term decisions.

You can also hop to a summary below the video to cut to the chase.

What is the Market Index telling us?

Video Summary

  1. The Market Index combines technical and sentiment data. This data can hit extremes which may indicate market tops and bottoms.
  2. Currently, the Market Index is at about 59. This indicates this rally still has room to run.
  3. Starting at 5:20, I show how you can download our Market Index data and run simple experiments.
  4. While the experiment I run is very simplistic, it still greatly outperforms buy-and-hold.

Market Index Quick Review

The Market Index combines technical (exchange and indicator) and sentiment (social and search) information to build a “big data” view of how extreme the long-term market may be.

The Market Index will indicate:

  • A potential top if price has extended up unusually quickly and people tend to be over-exuberant.
  • A potential bottom if price has dropped unusually quickly and people tend to be in deep despair.

Learn more about the Market Index.

Simulation Results

In the video, I discuss my personal approach to “Dollar Cost Averaging” for my long-term Bitcoin investments. That strategy is more sophisticated than the simple experiment I demo. But even though the experiment is simplistic and therefore misses opportunities, the results are still phenomenal.

  • Assuming a $1,000 initial investment on January 1, 2017, I’d exit on October 1, 2021 with $259,433. That’s a whopping 25,843% gain!
  • Buy-and-hold during this same time would take that $1,000 and turn it into $64,906. While also impressive, it’s much lower.

This simulation shows the power of realizing gains during long-term peaks and then reinvesting it when prices drop back down again.

Conclusion

The Market Index pulls in a huge array of data to help provide a big-picture view of the market. It is available as part of our Free Account. If you’re not already signed up, check out our free and paid plans at https://crypto-ml.com/pricing/.

About Crypto-ML

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