Despite experiencing mid-week volatility, Bitcoin (BTC) closed the past week with a commendable price gain of 4.07%, as reported by CoinMarketCap. This positive momentum keeps Bitcoin above the $60,000 threshold, continuing its upward trend from the previous week. However, questions remain about whether Bitcoin MVRV points to a bullish breakout under specific conditions, truly signaling a bullish market trend.
Related Reading: Bitcoin Bull Run Begins: Expert Points To Massive Upside Potential In Coming Months
Key Insights: Bitcoin MVRV’s Role in Indicating a Bull Run
On Friday, noted crypto analyst Ali Martinez shared his perspective on how the Bitcoin Market Value to Realized Value (MVRV) ratio could signal a return to bullish conditions. In the past two weeks alone, Bitcoin has surged over 23%, rising from approximately $52,800 to a peak of $64,041.
However, Martinez suggests that Bitcoin’s MVRV ratio must close above its 90-day moving average to confirm a bullish phase, following a period of sideways movement in July and August. The MVRV ratio is a crucial metric in understanding Bitcoin’s market trend, with a high ratio suggesting potential overvaluation and a low ratio indicating undervaluation.
When Bitcoin’s MVRV falls below its 90-day average, it implies a bearish phase where investors could be holding unrealized losses, potentially generating negative sentiment. Conversely, if the MVRV surpasses its 90-day moving average, it indicates bullish momentum, as Bitcoin’s market value exceeds historical norms.
Martinez has emphasized that for Bitcoin to confirm a bullish transition despite recent market gains, this specific condition needs to materialize. If it does, Bitcoin could potentially climb to the $68,000-$70,000 range, aligning with its next major resistance level. Such a development might ensure a strong performance for Bitcoin, even in September, a month historically known for bearish trends.
Implications of $2 Billion in BTC Futures Contracts
In related news, the opening of approximately $2 billion in Bitcoin futures contracts over the last 48 hours signifies heightened market interest following the recent price surge. However, this also raises concerns about a potential long squeeze, as highlighted by Ali Martinez. He explains that if Bitcoin’s price declines, these significantly leveraged positions could face forced liquidation, thus exerting downward pressure on the asset’s price.
Currently, Bitcoin is trading at $62,875, reflecting a 1.59% decrease over the past day. Additionally, daily trading volume has dropped by 16.75%, standing at a total of $36.4 billion.
Featured image from The Motley Fool, chart from Tradingview
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