Skogsraw shares in his analysis of March 21 that historically you made a higher profit if you regularly bought and sold bitcoin at times when the Fear and Greed Index indicates that there is extreme greed.
Beating Dollar Cost Averaging
In his analysis, Skogsraw compares buying $100 worth of bitcoin every week with a second strategy. With the second strategy, you have to buy $150 worth of bitcoin when there is extreme fear, $100 when there is fear, $50 when the market is neutral and $25 when there is extreme greed.
He also discusses a third strategy, in which the investor sells 5 percent of his bitcoin per week if there is extreme greed. This strategy is the most profitable with a return of 184.2 percent.
Skogsraw doesn’t explain why he chose certain dates, but he says it wouldn’t be fair to start with tops or bottoms. The period he chose covered at least two bear markets and one full bull market.
Strategy does not provide certainty
The analyst emphasizes that he did not perform more tests. So it might be a good idea to test the strategy over multiple time periods. “Apart from that, these are very convincing results that contradict a simple DCA strategy. I hope this will help you during the next bull market!”
In any case, his findings are consistent with the Crypto Fear & Greed Index’s insights that the market normally corrects when investors become too greedy.
Despite the fact that Skogsraw’s slightly more complicated DCA strategy has been successful in the past, we should not forget that the 124.8 percent return of the normal DCA strategy is also more than good.
Source: https://bitcoinmagazine.nl/nieuws/reddit-analist-verkoop-bitcoin-tijdens-perioden-van-extreme-hebzucht
