What a difference a few months makes. Back in July, half of you were asking whether it was time to back up the truck below the 200-week moving average. This month, Bitcoin has ripped up off the bear market lows and broken out, and the questions have shifted from “how much lower?” to “is this the real thing?”
The move was fast enough to push the short-term Ω-Score deep into overheated territory, and that tension runs through a lot of what you've sent in this month: how to read the breakout, what would make me doubt it, and whether hedging even makes sense when you're still accumulating at prices that look reasonable.
On top of that, October has brought its usual flood of “Uptober” charts, the Mt. Gox trustee's 31st October repayment deadline, and fresh debate on everything from sovereign buyers to quantum computing.
There's a lot to work through, so let's get stuck in.
What Happens to LTH Momentum When Volatility Fades?
What Happens to LTH Momentum When Volatility Fades?
Question: I'd like to understand the Long-Term Holder Momentum strategy better. Most people believe Bitcoin's volatility will decrease, which would mean smaller drawdowns but also smaller gains. If that's how things play out, how do you expect the strategy to perform in the future?
My Thoughts: That’s a fair question, and I don’t think anyone can promise how a strategy will do in the future, me included. Here’s how I think about it.
Long-Term Holder Momentum doesn’t trade price directly. It tracks the profit of long-term holders, meaning coins held for about 5 months or more. It compares their MVRV (price compared to what they paid for their coins) with its own 120-dayaverage. It holds Bitcoin while that reading is more than 2.5% above the average and moves to cash when it falls back.
The comparison is relative, and that matters a lot for your question. The strategy doesn’t wait for a 70% crash or a 300% rally. It asks whether holder profit is rising faster than it has been lately. If Bitcoin’s swings get smaller, the readings and their 120-day average get smaller together, so the signal adjusts to the new pace.
What I love most about it is that it measures human behaviour: whether buyers are still willing to pay up, and when that conviction starts to fade. I believe momentum and investor psychology will outlast any change in volatility, because people will keep chasing strength and losing interest when a move stalls.
Its other big strength is protecting the downside. Much of its edge has come from stepping aside before the worst of a bear market. It lost 1% in 2018 while Bitcoin fell 73%, and gained 3% in 2022 while Bitcoin fell 64%. That works in any market, because you can’t compound gains you’ve already given back. Nearby settings also performed almost as well, so the result doesn’t depend on one lucky number.
That protection is also what makes leverage worth a look. If Bitcoin calms down, I think moderate leverage becomes more reasonable, not less. The strategy only holds Bitcoin while long-term holders’ profit is climbing, so the leverage is used during the trends and is off for most of the falls. A modest multiple could bring back much of the return that lower volatility takes away. I’d keep it modest, since borrowing has a cost and a sharp day can still hurt. The Lab’s Leverage tab lets you test a multiple on this exact strategy and see the borrow cost and how close it came to its margin limit before you commit.
NFA, of course.
What Should a New User Watch Weekly?
Question: I'm a new user. Which on-chain metrics or indicators would you recommend reviewing on a regular cadence, say every week, to stay informed about where Bitcoin's price might be heading next?
My Thoughts: It depends entirely on your time horizon, whether you are an investor or a trader, and we try to cater for both here on the platform.
If you were going to pick one number and forget about the rest, it would absolutely be the Omega Score (https://onchainmind.io/indicators/the-omega-score). It takes dozens of different on-chain and technical signals and gives you both a Short-Term view and a Cycle view, depending on whether you are a trader or an investor. It is not perfect, but it gives you an overall degree of risk in the market for the time horizon you care about, so if you want one metric to check each week, start there. It covers both Bitcoin and Ethereum.
If you are looking at stocks, ETFs or commodities, one of my favourite mean reversion models is the Z-Score Probability Waves (https://onchainmind.io/indicators/z-score-probability-waves). It works on investor and trader timeframes, much like the Omega Score, but you can point it at any asset to get a sense of how stretched it is.
If the dashboards feel overwhelming, there are a few things to ease you in. Next to the search bar on the left you can filter by complexity, so start with the easier ones. Every view also has an Explain button, with an overview of what it is telling you, the signals to look for, and FAQs for every single view. There are well over 1,000 FAQs across the Studio, so most confusion is cleared up just by clicking that.
