One of the market’s most accurate indicators suggests that Bitcoin may need to fall further before it can fully bottom.
Data from institutions including on-chain analytics firm Glassnode shows that Bitcoin’s “MVRV-Z score” (market cap in circulation – realised market cap) is almost (but not quite) indicative of a price reversal.
MVRV-Z scores move a little closer to the “macro bottom”
Amid the debate over whether, or when , Bitcoin will break below its current low of $17,600 , new data suggests the market could easily face further losses.
As Filb filb, co-founder of trading kit maker DecenTrader, said, the MVRV-Z score is now in the typical green zone, but has not yet fallen to the lows it used to accompany price bottoms.
MVRV-Z measures whether bitcoin’s spot price is high or low relative to so-called “fair value. ” It uses market cap and actual price data and standard deviation to create one of the most effective tools for predicting Bitcoin price tops and bottoms.
LookIntoBitcoin, a data provider, pointed out that MVRV- Z accurately captures the top and bottom of every major wave in Bitcoin’s history, and completes it with an accuracy of two weeks.
The indicator has only been below the green zone a few times before, the last time in March 2020, but more downward pressure is set to repeat itself.
Filbfilb’s take on the latest data: “We typically bottom out when the MVRV-Z score is about 30% below the upper bound, and right now, the bottom is $15,600. “
The $16,000 bottom area is increasingly supported by consensus
The above indicators predict that Bitcoin will bottom at the $15,600 level, which is almost in line with the current price of Bitcoin bottoming.
In an update tweet over the weekend, CryptoBullet also listed this area as an important support area to watch, as $16,000 is the average difference between Bitcoin’s 50-month moving levels.