Investing requires knowledge of the market in which you are operating, as well as a good grasp of... timing.

"When is the best time to invest in bitcoin?" This is probably the phrase that investors, both individuals and professionals, who are interested in cryptos, have heard the most in recent years. And we can understand them, as investing in bitcoin has proved so successful over the long term.

The advice we can give you, especially if you're just starting out, is to acquire them regularly for amounts that you can psychologically accept losing.

This "technique" is called "DCA" (Dollar Cost Average). Over the long term, it helps to smooth out upward and downward movements in bitcoin, and indeed in all other cryptocurrencies.

If you want to do DCA, there are French start-ups Bitstack and StackinSat, or German Trade Republic.

But for those who prefer to invest a large sum in one go, timing is more than important 💡. It is therefore essential to understand the key indicators to successfully navigate this still fairly volatile universe.

1. The "wave"

This is the curve to follow that gives you an idea of the long-term outlook for the bitcoin price. Of course it is not infallible, but it has to be said that the trend has never been faulted for the time being. The low point recently observed (at the end of 2022) corresponds to the collapse of the FTX exchange platform.

A Twitter account is dedicated exclusively to tracking this trend: @davthewave (the vertical bars correspond to the "halvings", see part no. 5).

What this indicator is saying right now: this is an interesting moment, as we are at the bottom of the wave, and it has correctly bounced off the lower band.

2. The behaviour of long-term investors

The "Realized HODL Waves" offered by the company Glassnode is an analysis tool based on on-chain data that can provide valuable information on market dynamics. It shows how Bitcoin units are held based on their acquisition cost and the length of time they have not been traded (i.e. sold).

This can give an idea of the proportion of long-term investors versus those who trade more frequently. If a large proportion of bitcoins are held by long-term investors, this could indicate increased confidence in the asset.

🔵 During bullish market trends, older bitcoins are gradually sold by long-term holders to new investors. The hottest bands (red) expand, the coldest bands (blue) contract.

🔴 During bearish market trends, speculators lose interest and gradually transfer their bitcoins to longer-term holders. Cooler bands (blue) expand, warmer bands (red) contract.

What this indicator is currently saying: the market has reached a balance between these two groups of investors, with a slightly positive influx of new investors entering the market. "This resembles the conditions seen in 2016 and 2019, when the market was trying to recover from a major bear market," says Glassnode.

3. Level of "outflows" from exchange platforms

Outflows from crypto Exchanges refer to the amount of cryptocurrency removed from exchange platforms to be stored elsewhere, typically in digital wallets or cold storage solutions.

These movements can be interpreted as a potential indicator that investors have confidence in the long-term value of this asset. They may believe that the price will rise in the future and therefore choose to withdraw their funds to keep them on their side rather than sell them in the short term.

👉 When cryptocurrencies are withdrawn from the Exchanges, they are usually not available for immediate sale. This can reduce the selling pressure on the asset, which could support or increase its price.

Warning, mass withdrawals can also take place when investors seek to secure their assets against the risks associated with Exchanges, such as hacks or insolvencies. In this case, it is not a relevant indicator for anticipating a price rise.

You can track "outflows" on Cryptoquant or Glassnode.

What this indicator is currently saying: withdrawals are still a long way from the levels of early 2021, when the bull market was in full swing.

4. Interest in the word "bitcoin" on the internet

The popularity of the word "bitcoin" on Google can be used as an indicator of public interest in the cryptocurrency. This interest can, in turn, reflect or influence market movements. A sudden rise in searches could be a sign of increased interest with a potential rise in purchases.

🔴 A rise in the popularity of the word "bitcoin", can also be linked to a particular news story, without it having a direct impact on prices.

Last week, the Wikipedia page for bitcoin saw the highest traffic for 18 months. This can be put into perspective with the forthcoming arrival of a ETF Bitcoin Spot in the US, which is generating a lot of anticipation from investors.

You can follow the activity on the Wikipedia page with this link and track the popularity of the Google search with this one.

What this indicator is saying at the moment: we are seeing a stirring, but the level is 25 times lower than in December 2017 at the peak of the previous "bubble". On the other hand, we are at levels close to those seen in 2019-2020, just before the price surge.

5. The halving date

The "halving" of bitcoin is a scheduled event that occurs approximately every four years. Halving is important because it corresponds to the moment when the reward for mining a new block on the bitcoin blockchain is halved. In April 2024, this will fall from 6.25 bitcoins to 3.125 bitcoins per validated block 🤖.

The direct impact of halving is that the supply of bitcoins will become mechanically scarcer and miners, i.e. those who secure the network, have every interest in the price of bitcoin rising so that mining continues to be profitable.

Historically, halvings have been followed by a significant increase in the price of Bitcoin 👀.

It is essential to note that the past does not guarantee future performance, and that other factors could play a role in price increases. Nevertheless, halvings often attract considerable media attention 📺 which can increase awareness and interest in bitcoin, potentially leading to increased demand.

What this indicator is telling us right now: we are less than five months away from the halving, which will occur around 12 April 2024 🗓️.

This analysis does not constitute investment advice. It has been written without taking into account your personal circumstances, including your financial situation, risk profile and investment objectives.

Before investing in any product, investors should fully understand the risks involved and consult their own legal, tax, financial and accounting advisors.