Bitcoin’s (BTC) retreat from an all-time high of $ 67,000 to below $ 60,000 hasn’t stopped bulls from looking at new highs in the future, according to an indicator trying to predict market bottoms and peaks.
The calculation of risk is called MVRV and is the ratio between the market value of Bitcoin and its realized value, which corresponds to the ratio between price and book value (P / B), which compares the market value of a company to its book value. Thus, MVRV tries to determine whether an asset is undervalued or overvalued.
Bullish sentiment similar to 2017
MVRV above 3.7 warns that bitcoin is performing better, resulting in a sell. On the other hand, an MVRV value of less than 1 indicates an opportunity for Bitcoin to bottom out.
MVRV has historically helped bitcoin traders detect buy and sell pressures in the bitcoin market. For example, the orange overlays in the chart below represent the relationship between bitcoin price and MVRV release.
Bitcoin price versus MVRV. Source: CryptoQuant
Lennard Neo, head of research, explained in a new Stack Funds report released on November 4 that the current recovery in MVRV is similar to the decline seen during the 2017 bull run and is forming a series of higher highs and lows (green). Increase in the price of bitcoins.
In addition, MVRV also returned in the same manner after the price crash in May 2021 and fell below 1, indicating a drop in the value of the bitcoin market during this period. The scale has worked well for creating higher highs and lows, confirming the bullish trend for Bitcoin.
“With MVRV currently trading at 2.72, below its recent high of 3.96 in February, we expect further gains as it retests the 4.0 level,” Nu wrote in a report released on 4 November.
“If the MVRV trend continues in the near future, Bitcoin’s peak is likely to disappear for a while.”
Bitcoin for 70 thousand dollars?
Neo added that Bitcoin’s recent ability to hold $ 60,000 as a support level indicates a strong desire to test $ 67,000 again – or even expand its upside to $ 70,000.
The analyst mentioned two in-chain calculations in addition to MVRV to explain his optimistic outlook. This included calculations that track the balance of Bitcoin across all exchanges and cryptocurrency wallets that contain large amounts of BTC tokens.
In particular, the total number of bitcoins on stock exchanges around the world reached 2.311 million BTC, the lowest level in more than three years.
Bitcoin balances in all foreign exchange reserves. Source: CryptoQuant
The largest bitcoin investors also accelerated their accumulation when the bitcoin price recovered from the May-July 2021 crash.
According to the Glassnodes Whale Supply Shock Index, so-called whales – addresses containing 10,000 to 100,000 BTC – have increased their bitcoin purchases, recovering from less than $ 30,000 after July.
Bitcoin whale supply shock. Source: Glassnode
Dor Shahar, network analyst at CryptoJungle, called this a sign of a “multi-month cumulative uptrend” and predicted a new all-time high for bitcoin as whales withdraw more bitcoins from circulation.
Related: Bitcoin Whale Indicator Shows Multi-Month Accumulation Trend With Retest BTC at $ 67K
“The relationship between the two groups, whales and other fish, allows us to assess the dynamics of supply,” he said, adding:
“In this way, [the indicator] can help visualize that a whale’s shortage of coins can cause and affect the price. In addition, the macro peak indicator is more sensitive. ”