Many believe that Bitcoin’s impressive 100% rise this year, largely driven by the October ETF excitement, could be nearing its end as the hype declines. Even though a wave of investors liquidated their holdings to book gains, on-chain data indicates there’s still potential for more growth. The MVRV ratio is still distant from its danger zone, implying that Bitcoin’s $35K valuation isn’t inflated, hinting at potential buying demand in the upcoming weeks.
MVRV Ratio Is Yet To Reach Red Zone
Recently, Bitcoin has tried to break through the $35K resistance but has met strong resistance from sellers. Yet, with the MVRV ratio still more than 50% away from being considered overvalued, we can anticipate notable price actions for Bitcoin in the coming week.
CryptoQuant data reveals that the current MVRV ratio is at 1.67, considerably below the 3.5 benchmark that has historically signaled major market peaks. The ratio of Bitcoin’s market value to its realized value (MVRV) indicates that although Bitcoin has touched yearly highs, it isn’t as overstretched as in prior bull runs.
Historically, Bitcoin bull markets have climaxed at an MVRV of around 3.5. When compared to the present ratio of 1.67, this suggests the current bull market might still have potential for growth.
Market capitalization represents the overall dollar worth of the circulating supply, determined by the average daily price across major exchanges. On the other hand, the realized value, which is often seen as a more accurate measure of actual value, estimates the total amount paid for all current coins by tallying the market value of coins every time they undergo an on-chain transaction.
Very high MVRV values indicate that Bitcoin’s market price might be inflated compared to its fair or realized value, while extremely low values indicate the opposite.
What’s Next For BTC Price?
Over the last few minutes, Bitcoin price has been pumping hard following robust buying purchases near the dip of $33,900. BTC price is now attempting to make a breakout moment as it approaches $35K.
If bulls hold BTC price above the $35.3K mark, we might see further upward rally, potentially sending BTC price to test buyers’ patience at $36.6K. A successful move will create a breakout moment for Bitcoin above $40K.
Though the EMA20 trend line and RSI are surging, there’s a concern of a trend reversal. If Bitcoin fails to meet buyers’ confidence above $35,300, we might see a downward correction below the Fib channels.
As a result, bulls might get trapped and it can bring massive liquidation, resulting in a decline toward $32,500. However, BTC price is expected to witness a consolidation near this level as buyers will strongly defend this level.