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The red band range in the bitcoin bull market: falling out of the red band may be an excellent buying opportunity
CryptoChan2025/02/21 06:29
By: CryptoChan
Bitcoin (BTC) price fluctuations are often accompanied by significant rises and falls during bull market cycles. The "red band range" in the chart is a key indicator based on on-chain analysis, reflecting the cost range of active and tradable chips in the Bitcoin market.
The definition and significance of the red band interval
The black line in the chart represents the price of Bitcoin ( BTC Price in USD), while the red ribbon (red band range) consists of two lines: the upper bound is "Tradable Realized Price (based on Liquid Supply) " and the lower bound is "Liveliness Realized Price". These indicators are calculated through on-chain data and reflect the average cost of active and tradable Bitcoin chips in the Bitcoin network.
Tradable Realized Price (Upper Boundary): Based on the Liquid Supply of Bitcoin, it represents the upper limit of the cost of trading Bitcoin in the market. In the later stage of the bull market, especially in the "mad bull" stage, the market price often approaches or even breaks through this upper bound. At this time, market sentiment is high, and investors generally buy at high prices, pushing the price to a new historical high.
Liveliness Realized Price (Lower Bound): Based on the active level design of Bitcoin, it reflects the cost basis of long-term holders in the Bitcoin network and the undervalued area of active chips in the market.
The width and position of the red band range will change over time, reflecting market supply and demand dynamics and investor behavior patterns. In the early stages of a bull market, prices usually fluctuate below the red band range; as the bull market develops, prices gradually approach or break through the upper limit of the red band; and at the peak of the bull market, prices may significantly exceed the red band range and enter the "bubble" stage.
Current market conditions: falling out of the red zone
According to the chart, as of now, the price of Bitcoin has fallen out of the red band range. This is a key signal that may indicate the beginning of a market correction or correction. In past bull market cycles, falling out of the red band range often accompanied the intensification of market panic, but also provided potential buying opportunities for visionary investors.
- Why is falling out of the red band a buying opportunity?
The lower bound of the red band range (Liveliness Realized Price) is usually regarded as the "cost support line" of Bitcoin, reflecting the average buying cost of long-term holders and active market participants. When the price falls to or below this level, the cost basis of many holders has been covered, and market selling pressure may decrease. At this time, the decline is often nearing its end, and the price may begin to rebound and enter the next round of upward cycle.
- Historical case
From the chart, it can be seen that in the bull markets of 2017-2018 and 2020-2021, the price of Bitcoin fell below the red band after reaching its peak, followed by a significant rebound. For example, in early 2018, after breaking through the upper limit of the red band, the price quickly fell back and found support at the lower edge of the red band, ultimately laying the foundation for the next bull market in 2020.
The current bitcoin price has fallen out of the red band, which may be a short-term bearish signal, but from a long-term perspective, it may be an excellent opportunity to buy on dips.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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