An important cryptocurrency CryptoQuant, an analysis firm, recently shared an interesting analysis of the bullish potential in the cryptocurrency market.
The company’s analysts Bitcoin It closely tracks the Bitcoin Price Temperature (BPT), a unique metric that measures the number of standard deviations the price deviates from the 4-year moving average.
According to analysts, BPT is a crucial tool for understanding and predicting market trends. This metric compares past cycles with the current “warm-up” before a bullish rally. BPT uses four key indicators:
- 4-Year Moving Average (Blue): This represents the average cost of Bitcoin over the last 4 years. It acts as a baseline or “norm” for the current Bitcoin price.
- 4-Year Moving Average +2 Sigma (Green): This indicates a price level that is 2 standard deviations above the mean. If the price reaches or exceeds this level, it could indicate that the market is potentially overvalued.
- 4-Year Moving Average +6 Sigma (Orange) and +8 Sigma (Red): These represent even higher levels of deviation from the norm. The higher the price relative to these levels, the more likely it is that the market is in a “bubble” or extreme overvaluation.
If BPT is above +2 sigma, investors may consider this as a warning of possible overvaluation and increased risk. However, during this year the price did not even rise to the level of BPT-2. According to CryptoQuant analysts, this situation can best be described as the market “warming up” ahead of a bull run.
*This is not investment advice.
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