According to Adler, high values for this metric (close to 50%) indicate that the market may be overheating. This is attributed to factors such as overvaluation, increased profit-taking, selling pressure from long-term investors (LTH), and historically high levels of ETF inflows. In such cases, the market is likely experiencing a correction or distribution phase.
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Meanwhile, lower values (around 30%) reflect market composure. During these phases, low profit-taking, moderate ETF inflows, and limited selling pressure from long-term investors suggest favorable conditions for accumulation.
Adler, noting that the current value is 44%, stated that the market is neither overheated nor cheap. “There’s no bull- or bear-dominant environment,” the analyst said. “The market isn’t in overbought territory, but it’s not in opportunity territory either. Profit-taking is slowly increasing, but a mass rally hasn’t yet begun.”
*This is not investment advice.
Continue Reading: Experienced Analyst Introduces Special Metric: Is Bitcoin Price Likely to Go Up or Down? Here Are the Results
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