[TP Academy ②] "Can I buy now?"... Charts can be deceiving, but "on-chain data" doesn't lie

For investors wavering amidst the noise of the cryptocurrency market, the ‘TokenPost Academy’ with 8 years of on-site experience will provide a true investment benchmark. We invite you to embark on a seven-stage masterclass journey where ‘data’ replaces ‘intuition’ and ‘strength’ replaces ‘luck’. [Editor’s Note]

“Is buying Bitcoin now a chase to buy high and get trapped?” “It still feels like it will continue to fall. Where is the bottom?”

These are questions that the crypto community asks dozens of times a day. During upward movements, fear of missing out (‘FOMO’) torments investors who buy in, while during declines, fear of further losses (‘FUD’) causes trembling. Most investors press the buy button when they see news headlines or red bars (bullish candles) on charts. But while you cheer for buying, smart money (major players) are quietly holding their hands above the sell button. What are they actually looking at?

◆ Charts display ‘price’, but on-chain data reveals ‘psychology’

The stock market has financial statements. Revenue and profit can be used to calculate a company’s fair stock price. So how can we know the fair value of Bitcoin? The answer is ‘on-chain data’.

Blockchain is the world’s most transparent ledger. Who, when, and at what price bought tokens, all records are publicly available in real-time. Analyzing this data helps understand the ‘average purchase cost’ of all market participants. This is precisely ‘Realized Value’.

◆ MVRV-Z Score: A thermometer for interpreting market overheating and lows

This indicator analyzes the deviation between the current market price and the average cost of investors. The ‘MVRV-Z score’ has historically captured the peaks of bull markets and the bottoms of bear markets in Bitcoin’s 15-year history with chilling accuracy.

The principle is simple.

Red zone (overvalued): Current price is far above the average cost. Everyone has realized huge gains. A surge of profit-taking is imminent. (Sell signal)

Green zone (undervalued): Current price is below the average cost. Most market participants are at a loss. It’s already the ‘surrender’ stage where no one can sell. (Buy signal)

◆ “Data is more accurate than emotions”

When Bitcoin broke $60,000 in 2021, the MVRV indicator pointed to the dangerous ‘red zone’. Conversely, at the end of 2022, when Bitcoin plummeted to $16,000 and headlines declared ‘Crypto is dead’, the indicator entered a historic buying opportunity ‘green zone’.

The public is influenced by news, buying at highs and selling at lows, but investors who understand how to interpret on-chain data operate in the opposite way, capturing wealth.

“Never invest based on intuition. Data does not lie.”

Tracking major players’ movements and judging market bubbles are the only weapons for survival in the treacherous crypto market.

👉 [Practical Analysis] Not only MVRV-Z, but also four core indicators tracking major players, including NUPL and SOPR, are fully covered in the ‘Second Stage: The Analyst’s Path’ course at TokenPost Academy.

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