Bitcoin has long been a popular investment option for those trying to make a profit. However, the crypto market‘s volatility has made and will continue to make risky investments in any asset here.

However, there are a few strategies to understand and mitigate this risk when it comes to Bitcoin. Understanding which ones are highlighted below will help you make this process safer.

How risky it is?

The first indicator here is the 200-day moving average, commonly known as the Mayer Multiple, which indicates whether or not the market is overextended. An overbought market reveals how far the price has deviated from its long-term trend.

The chart shows that the 200 day moving average – 1.22 is currently in the middle zone, indicating that everything is good. It could be claimed that the market is heating up if the values were higher.

Bitcoin Mayer Multiple – Ecoinometrics

Second, we can study investor behavior to learn about the second component contributing to a booming market. Investors have been steadily increasing their holdings over the last month.

This wasn’t a tiny group of investors, however. The largest growth was seen in addresses between 100 and 1000 Bitcoin, which increased by 202 addresses in a week.

At an average of 101 BTC, each address is worth over $5.7 million in total. This equates to about $1.11 billion in Bitcoin inflows.

However, the accumulating tendency has slowed, and there is currently substantially less demand for BTC.

Investing during a period of reduced demand and more supply is considered high-risk and should be avoided.

Addresses holding 100 – 100k BTC –  Glassnode

Is it that dangerous to invest right now?

It isn’t because, despite the decreasing demand, holders keep the demand-to-supply ratio constant. So although now is an excellent time to sell and take profits because MVRV is at a 5-month high, they are not going to do so.

Bitcoin MVRV ratio – Glassnode

The lack of sales is because there is absolutely no selling pressure. The market is neither vulnerable to a price drop nor has it reached any new highs. As a result, HODLers will continue to do so.

Overall, Bitcoin is not risky for new investors at present, taking into account all factors.

Bitcoin aggregate risk – Ecoinometrics


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