They say it’s not what you know but who you know. Of course, when trading Bitcoin, what you know is kinda important too.
Following on from our rundown of on-chain metrics, here are a bunch of useful off-chain indicators that no trader should be without. And possibly a few more on-chain metrics too.
Again, these are compiled from a guide by crypto-analyst, Adam Taché.
The ‘Mayer Multiple’ is one of the most popular metrics and derives from the current price divided by the 200-day moving average (200-MA). The average value is 1.39, and historically, when it becomes equal to or greater than 2.4 it will retrace to under 1.5.
Spent Output Profit Ratio
The ‘Spent Output Profit Ratio’ (SOPR) tracks profits or losses made on a spent output and can be used as a marker for local tops and bottoms.
Put simply, SOPR is the selling price divided by the price paid and oscillates around a value of one. In a bear market, values above 1 are rejected, as holders desperately try to sell for a profit, causing the supply to ramp up and a price drop. Conversely, in a bull market, values below 1 are rejected, because people are reluctant to sell at a loss, constricting supply.
Market Value Derived Metrics
‘MVRV Ratio’ is a measure of Market Cap/Value divided by Realised Cap/Value. Historically, an MVRV of less than 1 indicates capitulation, and a value of greater than 3.7 signals an over-valuation.
‘MVRV z-score’ is the number of Standard Deviations between the Market Value and Realised Value. Or how strongly detached from Realised Value the Market Value is. It is calculated by subtracting the RV from the MV and dividing by the Standard Deviation and tends to go parabolic just before a prolonged downturn.