When’s the best time to buy Bitcoin? I’ll show you a smarter way.

This video is about a Bitcoin buying strategy

that's designed to maximize the chances of buying

the bottom and minimize the chances of buying the top.

For me personally, I don't trade Bitcoin,

I don't sell Bitcoin, I buy Bitcoin, and I hoddle.

And historically, I just dollar cost average,

meaning I buy the same amount of regular intervals

regardless of the price, because that strategy allows you

to take advantage of volatility and not spend all day

looking at price charts.

But I recently did an interview with James Check,

basically the best on-chain analyst in the business.

You can go watch that right here.

And I asked him of all the metrics that people look at.

Tons and tons of them are just noise,

so which ones are true signal?

He gave a very insightful answer,

and he went on to talk about the strategy he uses.

Now, he is a long-term Bitcoin hodler, he's not a seller,

but he does look at a couple key metrics,

not to try to time the exact top or the exact bottom,

but to generally know when it's a good idea

to be more aggressive about your dollar cost average,

because you're likely getting coins at good value,

versus when to throttle down your dollar cost average,

or to turn it off completely,

because it's likely a time that euphoria is high,

which means future returns are more compressed.

Now, you might say that's the antithesis of dollar cost average,

because you're not supposed to try to time the market.

And if you have a decades-long time horizon for your Bitcoin,

and all you care about is stacking more sats,

then I want to board with that too, I get it.

But I can also understand the value

in wanting to minimize the emotional toll of buying tops,

or just temporarily accumulate some dry powder in fiat,

so you can deploy more heavily in deep value territory.

So I'm gonna play James's answer for you now,

and then we're gonna walk through the explanation

a little more in depth.

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So for me as a hodla,

having bought the top many times in my life,

I now prefer to look for when people are feeling kind of crabby,

and when they're starting to capitulate,

now I'm like, at a minimum,

I know I'm not buying the top anymore.

I just don't want to buy coins when it's high,

and I want to stack sets when I know it's not the top.

Now, what drives people to buy or sell?

It's generally how they're feeling,

and what metric helps describe how people feel,

things like MVRV,

which stands for market value to realize value,

it's basically showing you how in profit is the average guy.

If it's very high,

everyone's feeling really good.

Twitter's very excited.

People have got big green numbers in their portfolio.

What are the smart money doing?

They're going to sell and take profit,

because that's what they do.

Then you get the people who buy that top,

the market sells off,

and there's another metric,

which is kind of the sister called SOPA,

Spent Output Profit Ratio.

So MVRV describes the unrealized profit or loss.

How good are people feeling?

SOPA looks at the same thing,

except only for coins that are being spent and moving.

So what you see is that when people are feeling good,

MVRV is high, unrealized profits are high.

SOPA starts to tick up,

because people are taking those profit.

That's starting to look like a top,

the top, a local peak, a global peak.

Then you get the people who bought in the euphoria,

thinking, oh yeah, let's go.

We're going to 500K.

And then it sells off down to 80,

and SOPA goes negative.

It means people who bought high are now selling low.

And at the same time, MVRV goes to low levels,

showing you that people aren't feeling so good.

As a daily DCAer,

when we've got a short-term MVRV,

people are not feeling good below one,

and short-term SOPA is below one,

so people aren't feeling good,

and they're locking in losses,

my daily DCAer is switched on.

And the moment we start moving higher,

where everyone's feeling good and taking profit,

I switch it off,

because now I'm not buying the top,

and I am buying a bottom, the bottom, every bottom.

But I'm not buying every top.

Just a great way to flip it around.

So here we are on charts.checkonchain.com.

This is James's website.

And what an icecat.

You can actually look at this stuff for free

without being a subscriber,

whereas GlassNote or CryptoQuant

or whatever you'd have to sign up.

GlassNote wanted like $100 a month or something ridiculous.

Now, I'm going to be totally honest.

Like some of you out there probably know a lot more than me

about all these metrics and these charts,

because I'm new to this part of it,

because I've spent all my time studying

the monetary components of Bitcoin.

Why Bitcoin is better money, harder money?

Why it has value, et cetera?

Now, he has the section here,

which is short-term holder indicators.

So he's already aggregated into one chart,

the short-term holder indicator for us,

which is going to have the MVRV and SOPR

together in one chart.

What a nice guy.

And we'll start by just going a little more in-depth

to explain the two metrics that James talked about.

So MVRV, market value to realized value, market value.

Obviously, current price times, the circulating supply,

and the realized value is what people actually

paid for their coins on average.

So because Bitcoin is a distributed public ledger,

people who do on-chain analysis can literally

see that and calculate it.

It's basically a crowd sentiment gauge.

It's basically showing you how in-profit is the average guy.

So in general, are people sitting on big un-realized gains

or are people under water on average?

When MVRV is above one, people are in profit,

the market feels good, confidence and greed is high.

When MVRV is below one, people are under water,

they feel bad and there's fear, doubt and more capitulation.

If it's very high, people are feeling good,

people got big green numbers in their portfolio,

they're showing their screenshots,

everybody's celebrating.

And what that generally leads to is that some of them

are going to sell and take profit.

And that's where the other metric that he talks about comes in,

which is SOPR, which is not just about sentiment.

SOPR is spent output profit ratio.

Are people actually giving up and selling

or are they taking profit?

Did these coins move at a profit or at a loss?

SOPR, above one, coins are being sold in profit.

SOPR, below one, coins are being sold at a loss.

MVRV tells you more about sentiment and feelings.

SOPR tells you more about actual behavior.

And when we're looking at these metrics,

we're not looking at long-term hotlers.

James focuses on short-term, which I believe is coins

held under 155 days.

So to see what's really affecting the day-to-day price

the most, you actually have to filter out the diamond hands

and zoom in on the people who are more likely to panic

or get swept up into euphoria.

Again, nobody is saying buy exactly here or sell exactly here

or this predicts the bottom or the top.

It's probabilistic.

It's just about tilting the meter on your DCA,

not timing the market exactly.

Because historically, when both MVRV and SOPR are negative,

that's when the short-term holders are under water

and capitulating and that's historically

a good environment to lean in.

When both are positive, that's historically a better environment

to cool off and not fulmo in, like the tourists are.

There's so much simpler way, obviously, to look at this,

which is a tweet from Safety Namos, basically said,

you buy when no corners are posting red screenshots

and gloating and you sell when big corners are posting

all-time high screenshots and running victory laughs.

That's the simplest version and the on-chain data

just helps to back that up with real numbers.

So this is the chart where James has aggregated

the metrics he talked about.

Now he's got more in-depth stuff on here

that I don't think we need for these purposes.

I'm gonna toggle off the standard deviations

and I'm gonna toggle off the futures funding rate

and we're left with obviously the Bitcoin price,

the short-term holder cost basis,

the MVRV metrics and the SOPR metrics.

Now what he's done here is basically shown MVRV

when it's negative, you can toggle it on or off.

So only when it's below that horizontal line that is one

and MVRV short-term holders when it's positive.

So he separated them very cleanly

so you can see always when it's above one

and you can toggle it on and off it.

Same thing with SOPR.

So you can very easily show me only times

when SOPR and MVRV are both negative below one

or the opposite.

Show me times when SOPR and MVRV are both positive

above one.

Whoops, sorry, there it is.

Now the default zoom is looks to be like a six-year period.

So the six-year view is going to help you understand

our short-term holders right now broadly in profit

or lost relative to history.

So you can see what the different structural extremes

look like and you can see basically that the times

where we're deeply in the negative in SOPR and MVRV

are pretty rare.

Then you can come up here and change it obviously

to the last six months and the last three months.

One, I think way to think about it, maybe this isn't perfect,

but one way to think about it could be

use the long-term view to decide whether you're accumulating,

use the medium-term view to decide how aggressively

use the short-term view to understand market sentiment,

not exact timing.

So here's one question I had,

which is let's look back at last fall

when the price peaked at the all-time high at like 126,000.

Let's say would this strategy have helped you actually

not by the top too much.

So we're going to try to grab like three months.

We'll zoom in here September to November.

We're going to try to get three months.

So the peak I think was October 5th or October 6th,

right here.

We know in hindsight that that's where it peaked

and we've come down almost 50% since then.

So we're going to look and see would the MVRV in SOPR

both above one at that time?

Would that have been basically a signal

to tell you to slow down your buying?

So if we toggle off the times when they were negative

and we can just see green and orange

when they were both above one.

Basically we're not saying this would have called

the exact top, but it would have told you

it's a perfectly good time to slow down on your DCA.

So both short-termholder MVRV and SOPR were above one,

which means short-term holders were sitting

in unrealized profits and they were selling into strength.

And price obviously was above short-termholder cost basis.

This basically would have told you

this is not a high-edge DCA environment.

That means you could reduce your DCA

or reduce your frequency or pause altogether.

Now let's contrast it with right now.

I just reset it to the last three months.

Obviously price is under short-termholder cost basis,

short-termholder MVRV and SOPR are both below one,

short-term holders are underwater and losses being realized.

This is the opposite of what we saw at the all time high.

Obviously I do also think that you can't help but notice

that basically when you're looking at both of those numbers below one,

you're also seeing the same exact timing of that

is when price is below short-termholder cost basis.

You could also just simplify this even further

to increase DCA when price is below short-termholder cost basis

and decrease it when it's above.

That would probably get you 70% to 80% of the benefit

of looking at the even deeper metrics.

The price being below short-termholder cost basis

doesn't tell you whether people are actually starting

to sell at a loss yet,

but it seems to be pretty good indicator,

like they definitely move together.

And if you move back out to the default zoom,

you can see that what we're in right now is a time

that's comparable basically to only two or three other times

in the last six years.

This in March of 2020 is obviously COVID.

This late 2021 was obviously what we know was that cycle peak,

like 69K and we know with hindsight being 2020

that we sort of went to bear market after that.

And then obviously the FTX crash was,

I think in November of 2022,

obviously we know this was a good accumulation zone.

So I'm not gonna go through every single example

and see if it's historically always been right,

but seems to me to be directionally accurate

in terms of at least gauging sentiment,

engaging whether or not it's a good time

to lean heavily into your DCA or back off of it.

I hope you found this interesting.

I just wanted to, from my own edification,

do a deep dive to better understand the metrics

that James was talking about,

how to better understand it and see what's going on.

And then potentially put this strategy into play.

Obviously right now we know is a good time

to be dollar cost averaging or buying more heavily

because we know we just crashed and I'm not gonna say

that 60K or whatever it was definitely the bottom,

but we're definitely in a good accumulation zone

as far as I'm concerned.

And maybe 2026 I'll put this strategy into play

and see how it plays out.

Let me know in the comments if you've tried it

or you think it's a good idea.

But regardless, the most important thing,

as always, is that you quit slacking and start stacking.