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Bitcoin (BTC) Is Once Again Overvalued (and It's a Good Thing)

Tue, 03/24/2020 - 19:58
Alex Dovbnya
One of Bitcoin’s key metrics suggests that Bitcoin is overvalued, which means that the bottom might be already in
Cover image via stock.adobe.com
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Bitcoin is no longer trading at a discounted price, according to the popular metric that helps to identify whether the top cryptocurrency is underpriced or overpriced. 

It could be a sign that BTC has already bottomed out earlier this month. 

Bitcoin (BTC) Price Level That Could Resume Bull Trend Revealed by Tuur Demeester

The worst might be over 

As reported by U.Today, Bitcoin’s market value dropped below its realized value earlier this March. Hence, MVRV Z-score dipped below 0, which appears to be a rare occasion.

This was preceded by the collapse of the whole crypto market on March 12 when BTC nose-dived 38 percent in a single day (its third-biggest daily drop on record). 

The good news is that the Z-score also was negative when BTC was bottoming out in January 2015 and December 2018. If history is any guide, the flagship cryptocurrency might not revisit its 2020 low again. 

Trading Legend Peter Brandt Spots Ugly Bitcoin Price Pattern. Can BTC Collapse to $2K?

Bitcoin’s intrinsic value

Back in January, when BTC was trading just above $8,000, JPMorgan calculated that BTC’s was still trading well above its intrinsic value. It mainly hinges on the coin’s hashrate (the metric that measures the processing power of the entire network).

With both Bitcoin’s difficulty and hashrate taking a massive hit due to the exodus of miners in March, it’s safe to assume that Bitcoin’s intrinsic value also declined significantly. 

About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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