How to approach a Bitcoin market which is only increasing?

Disclaimer: This is not investment advice. Do your research before investing any money in crypto.

This article answers the most important retail question: “Should I invest in bitcoin now?” With bitcoin only increasing, it could be difficult for new investors waiting for a pullback to invest. While waiting for a withdrawal to invest seems reasonable, it is not practical, especially for new users.

So how do you invest? Obviously, waiting for a withdrawal hasn’t worked since New Year’s Eve, as bitcoin has consistently risen by an average of 4%.

No matter what type of investor you are, here are a few things to check before buying bitcoin:

On-chain metrics are a specialty of blockchain due to their transparent nature. Users can observe what is happening on the blockchain without compromising the user’s pseudonymity.

While on-chain metrics can seem intimidating, it isn’t. Managing on-chain data, on the other hand, can be a difficult task. However, luckily for us, there are several websites that give us on-chain metrics without having to worry about data management. You just have to interpret them.

Think of on-chain metrics as a prophecy, but only more certain and reliable.

Here are some quick on-chain metrics you can check before investing in bitcoin.

Stable flow of money: Stablecoins are used to buy crypto assets, be it Bitcoin, Ethereum, XRP, or Polkadot. Therefore, if we see a large inflow of stable currencies to the stock exchanges, we can interpret this as a bullish sign as investors are ready to buy and enter the market.

Exchange reserves: If foreign exchange reserves go down, we can assume that investors withdraw their funds from the stock exchanges and this only happens in a bull run where investors let their assets gain profit and wait for the top. Therefore, the decline in foreign exchange reserves is optimistic.

Exchange flow: If investors are depositing assets other than stablecoins, it means that investors want to sell that asset or maybe exchange it for something else. In all cases, it is about selling / converting an asset and is bearish. On the contrary, if we observe significant outflows of assets [like BTC, ETH] from an exchange we can assume that it is either stored in a cold room or it was an OTC deal and investors are removing it from the exchange in anticipation of a bull run . Therefore, it is also optimistic.

Refer to this article for an example.

Likewise, one can find more trends like these if one becomes familiar with on-chain data or other blockchain / exchange data. For example, take a look at the table of funding rates overlaid on the price of bitcoin.

A simple thing to remember here is that every time the finance rate fell, it was a signal to buy, as the price jumped after that drop.