Masterclass #7: Sell-side Risk Ratio

The Sell-side Risk Ratio provides insight into 'expected volatility', and is an ideal tool for tracking trend exhaustion, market instability, and when price is approaching an equilibrium.

G’day Folks,

Markets are always a dynamic process, and are certainly not a static, nor fixed destination. A useful way to think about how markets trade is they are attempt to find equilibrium, pricing in all available information at the time.

As we know, the world is constantly changing, and this means that the equilibrium conditions today, are likely to be different to the equilibrium conditions of tomorrow.

For Bitcoin, we can imagine that its market equilibrium is affected by many factors, such as:

• What the price range is, and how long it has been trading around it.

• How many coins have been mined, sold, and purchased by miners and investors.

• The influx of new capital due to adoption, awareness, and HODLer demand.

• Global factors like regulations, liquidity, economic booms, and recessions.

Ironically, by the time the market reaches an equilibrium state, it is almost always a signal that a new wave of disturbing forces are arriving to shake things up again.

In this masterclass module, I will introduce one of my personal favourite metrics, the Sell-side Risk Ratio, which is designed to help navigate these dynamics. This is a fantastic tool for tracking how close, or far away we are from an equilibrium state…and can therefore be considered an indicator for when the next major shake-up is around the corner!

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📈 Reminder: you can find the charts from our articles on the Checkonchain Charting Website, and a guide in our Charts Tutorial Video.

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