The MVRV, a significant on-chain Bitcoin indicator, has broken out of oversold territory, which has traditionally foreshadowed a bull market.
MVRV is a long-term Bitcoin indicator. It forecasts BTC prices below their “fair value.” The MVRV Z-Score, based on historical market capitalization data standard deviation, determines if Bitcoin is overvalued or undervalued relative to its “fair value.”
During severe bull or bear markets, the MVRV Z-Score might move beyond its three ranges.
The Bitcoin price is below “fair value” in the green region between 0 and -0.5, in the neutral range between 0 and 7, and above “fair value” in the red area between 7 and 9.
When the MVRV Z-Score was green, Bitcoin prices bottomed. The red indication indicated a BTC market high and overbought time.
The MVRV has left the purchasing region, which has coincided with BTC price accumulation.
Cryptocurrency market expert @CryptoNoob 1 posted a chart of MVRV, showing the losses below the 200-day average and noting that the January BTC market advances lead to a breakthrough from this level. He added “the price has usually risen fast following this event.”
This is encouraging, however the indicator has previously faked out and returned to test it.
Still, with the BTC price breaking out of the long-term logarithmic resistance line (red) since its all-time high of $69,000 on November 10, 2021, and the MVRV Z-Score heading for a re-test of the oversold area (blue line), both events may occur simultaneously, indicating a crypto bull market resumption.
Recent crypto market dislocations are intriguing. Retail traders doubt Bitcoin bottomed in November. Options contracts indicate great confidence that the bottom has been achieved.
This paradox presents a unique opportunity for crypto market forecasters. A superb trade awaits those expecting further lows.
The differential for 15,000 BTC, priced at 0.14 and heading into 2024, using December 23 as a proxy, suggests an excellent trade.
This delta measures the option price change compared to the underlying asset price change. A smaller delta means the option price is less sensitive to Bitcoin price swings, reducing risk.
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