Bitcoin price
A key technical indictor acurrately predicts the best moments to accumulate bitcoin. Source: Shutterstock

It’s easy to get scared away by the daily volatile movements of bitcoin. Over the weekend, bitcoin jumped 20 percent in a matter of days. Since then, BTC shed over $1,000 before recovering slightly again. It’s a volatile market.

But zoom out for a moment and you’ll see the bigger picture. This chart, shared by on-chain analyst Willy Woo, pinpoints the best windows of opportunity to buy bitcoin for the long term.

Using what’s called the ‘ribbon difficulty’ indicator laid across the long-term logarithmic bitcoin chart, it has historically predicted the best moments to get exposure to bitcoin over the last ten years.

So next time you’re about to FOMO into the market, zoom out and take note of this chart.

The best time to buy bitcoin?

According to Willy Woo’s analysis, the perfect moment to accumulate bitcoin is when the difficulty ribbon compresses (gets very thin) or flips negative (when the strong, dark line crosses above the weaker lines), shown below.

Bitcoin ribbon indicator
The bitcoin difficulty ribbon accurately predicted the best moment to start accumulating bitcoin in early 2019, before a 200% runup. Source: Willy Woo / Twitter

 

The indicator accurately predicted the bottom of the market in late 2018, early 2019. Smart investors should have started accumulating at this point (many hedge funds were).

It’s a data-driven confirmation of a decades-old investment strategy: buy when there’s blood in the streets. In other words, you buy assets when others are fearful, and sell when they’re greedy.

What exactly is the difficulty ribbon?

The ribbon charts moving averages on mining activity, allowing us to visualize the change in bitcoin mining difficulty. It also depicts how bitcoin mining affects the BTC price. As Willy Woo explains:

“As new coins are mined into existence, miners sell some of their mined coins to pay for production costs. This produces bearish price pressure. The weakest miners sell more of their coins to remain operational. When it becomes unsustainable, they capitulate, hashing power and network difficulty reduces (ribbon compression), leaving only the strong, who sell less leaving more room for more bullish price action.”

Bitcoin remains under $12,000

The ribbon difficulty pattern accurately predicted the recent 200 percent bitcoin price runup. After hitting a high of $13,880, BTC fell back below $10k before mounting another run.

At the time of writing, bitcoin is battling the $12,000 mark in what most analysts see as a healthy pullback. Trader Josh Rager explains:

“Bitcoin is doing okay, needed a pullback day, I’m not remotely bearish as it just needs to [close above] $11k at this time. Right now we’re on our way to closing the highest price weekly candle of 2019 if $11,469 holds.”

You May Also Like

Ethereum’s Vitalik Buterin to Sign ‘Free Virgil Griffith’ Petition Following FBI Arrest

Ethereum co-founder Vitalik Buterin is signing a petition to free estranged Virgil Griffith who was arrested by the FBI on thanksgiving.

Analyst Explains Why Bitcoin Price Could Plummet to $2,020 in 2020

An analyst says bitcoin could crash to $2,000 to $3,000 range as…

VeChain (VET) Jumps a Whooping 26%, Thanks to an Iconic Retro Game Remake

Contrary to the rest of the crypto market VeChain (VET) is up 26% today and showing no signs of slowing down, but what’s driving the token?

Bitcoin Price Suffered 31% November Slump But a Hostile China Boosts Outlook

Bitcoin price dropped by 31% since October. Yet, Spencer Bogart sees strengthening fundamentals pushing BTC up in the medium-term.

Limited Edition Bitcoin Watch Beckons Mt. Gox Remnants

A limited edition bitcoin watch with a widely known Mt. Gox wallet was spotted in Abu Dhabi. Is the royal family linked to the scandal?

Analyst Dispels the Myth: Bakkt Futures are Not Backed by Bitcoin

Bakkt’s arrival was supposed to be bullish for bitcoin. With growing volume, the demand has not translated into bitcoin prices. Here’s why.