A bitcoin on-chain metric suggests that a 2017-style bullish trend would continue

Bitcoin’s (BTC) retreat from its historic high of $ 67,000 to below $ 60,000 hasn’t stopped the bulls looking for another high in the future, according to an indicator that seeks to predict market lows and highs.

Called MVRV, The risk figure represents the relationship between the market value of Bitcoin and its realized value, similar to the price-to-book value (P / B) ratio, which compares a company’s market value to its book value. MVRV tries to determine whether an asset is undervalued or overvalued.

A bullish setup similar to 2017

An MVRV reading above 3.7 indicates the peak of Bitcoin and leads to sell-offs. On the flip side, an MVRV reading below 1 implies buying pressure on the prospect that Bitcoin will bottom out.

A bitcoin on-chain metric suggests that a 2017-style bullish trend would continue
A bitcoin on-chain metric suggests that a 2017-style bullish trend would continue

MVRV has historically helped Bitcoin traders identify buying and selling pressures in the Bitcoin market. For example, the orange overlays in the graph below represent the correlation between the price of Bitcoin and its MVRV output.

Bitcoin Price vs. MVRV. Source: CryptoQuant

Lennard Neo, Head of Research, stated in a new Stack Funds report released Nov. 4th that the current rebound in MVRV is similar to what it was during the 2017 bull run, with a series of highs and lows (green) when the price of bitcoin is rising.

What’s more MVRV also rallied in a similar fashion after the price drop in May 2021, dropping below 1, suggesting the undervaluation of the Bitcoin market during this period. The metric rallied well to produce higher ups and downs, confirming the uptrend for Bitcoin.

“With the MVRV currently trading at 2.72, away from its recent high of 3.96 in February, we expect more room for growth as it retests the 4.0 level,” Neo wrote in a November 4th Report adding:

“If MVRV’s uptrend develops in the near future, Bitcoin’s peak is likely a long way off.”

Bitcoin at $ 70,000?

Neo added that Bitcoin’s recent ability to hold the $ 60,000 level as a support level shows its strong willingness to retest $ 67,000 or even extend the upward move towards $ 70,000.

In addition to the MVRV, the analyst mentioned two on-chain metrics to explain his optimistic outlook. This included metrics that track bitcoin balances across all crypto exchanges and wallets that contain large numbers of BTC tokens.

Special, The total inventory of Bitcoin held by exchanges around the world reached 2.311 billion BTC, its lowest level in more than three years.

Bitcoin reserves on all exchanges. Source: CryptoQuant

The largest Bitcoin investors also accelerated their accumulation trend as Bitcoin’s price recovered from its May-July 2021 price slide.

According to Glassnode’s Whale Supply Shock indicator, so-called whales, addresses between 10,000 and 100,000 BTC, increased their Bitcoin purchases by less than $ 30,000 during the post-July recovery.

Bitcoin whale supply shock. Source: Glassnode

Dor Shahar, an on-chain analyst at CryptoJungle, rated as a sign of a “multi-month upward trend in accumulation” predicting new all-time highs for Bitcoin as whales remove more of the out-of-circulation supply of BTC.

“The relationship between the two groups, whales and other fish, gives a measure of the dynamism of the supply,” he said, adding:

“Because of this, [el indicador] it can help visualize the shortage of supply that the coins held by the whales can cause and its effect on the price. There is also a more sensitive top macro display. “

The views and opinions expressed are those of the author only and do not necessarily reflect the views of Cointelegraph.com. Every investment and trade move involves risk, you must conduct your own investigation when making a decision.

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