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Indicator That Predicted Bitcoin's Bottom During Last Two Bearish Cycles Flashes Again: Details

Mon, 07/04/2022 - 12:08
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Tomiwabold Olajide
This indicator hit -50.09% in mid-June and currently sits at -48.23%
Indicator That Predicted Bitcoin's Bottom During Last Two Bearish Cycles Flashes Again: Details
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As shared by crypto analyst Ali Martinez, Santiment's MVRV index, which timed Bitcoin's market bottom in the last two bearish cycles, is flashing once again. Bitcoin's MVRV 365D fell to -56.85% and -55.62% in January 2015 and December 2018, respectively, to mark the end of the bear market. This indicator hit 50.09% in mid-June and currently sits at -48.23%.

The value of MVRV (market value to realized value) gives an idea of how much an asset is overvalued or undervalued.

According to Glassnode, after reaching a peak of $69,000 in November 2021, the Bitcoin market has gone through two different capitulation phases. The first phase was triggered by the Luna Foundation Guard force selling over 80,000 BTC, and the second occurred two weeks ago during the market-wide slump.

Alex Kruger, a crypto-analyst and economist, also believes that Bitcoin might have capitulated during the market downturn two weeks ago. The analyst cited the fact that trading volumes peaked at this time, signaling capitulation, which produces significant bottoms.

The formation of the bear market floor in prior cycles is consistent with the current state of the macro indicators for Bitcoin, ranging from technical to on-chain, which are at all-time lows. However, due to the current macroeconomic environment, all theories and historical models may be put to the test when establishing a bear market floor for Bitcoin.

Bitcoin whales add 30,000 BTC to holdings

As shared by cryptoanalyst Ali Martinez in the past week, addresses with 100 to 10,000 BTC added roughly 30,000 BTC to their holdings.

In the past week, Glassnode reported that shrimps, or addresses with less than one BTC, have been accumulating alongside whales, or addresses with more than 1,000 BTC amid the incredibly difficult market conditions of 2022.

The on-chain analytics firm observed these large entities have been rapidly increasing their balance, buying 140,000 BTC from exchanges each month. They have thus increased their balance to over 8.69 million BTC, or 45.6% of the BTC supply. As reported by U.Today, retail holders or addresses with less than 1 BTC added 113,884 BTC to their holdings in 2022.

Bitcoin was trading slightly up at $19,438 at press time.

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About the author

Tomiwabold is a cryptocurrency analyst and an experienced technical analyst. He pays close attention to cryptocurrency research, conducting comprehensive price analysis and exchanging predictions of estimated market trends. Tomiwabold earned his degree at the University of Lagos.