LONDON (IT BOLTWISE) – Bitcoin could be preparing for a sustained rally as a key valuation metric gives a bullish indication. Analysts suggest that the Bitcoin market may have reached a ‘cyclical bottom’, indicating a possible recovery.
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Bitcoin may be poised for a recovery as a key valuation metric gives a bullish indication. Bitcoin’s market value to realized value (MVRV), an indicator that measures whether the cryptocurrency is overvalued, recently fell below its 365-day moving average. This could indicate that Bitcoin has reached a local bottom, analysts report.
Historically, a decline in the MVRV ratio below the 365-day moving average has often signaled a buying opportunity. In the past, this has resulted in significant price increases, suggesting that Bitcoin is once again entering an undervalued phase where long-term investors typically begin to accumulate.
With Bitcoin price down 18% to $103,530 from an all-time high of $126,000, the MVRV ratio has narrowed, indicating a decline in speculative excesses and growing long-term confidence. Should this indicator move higher from current levels, it could confirm that the recent sell-off was a cyclical bottoming that could support a renewed bullish phase.
Another factor that could affect Bitcoin price is the rotation of capital from gold to cryptocurrencies. Data shows that gold has fallen 8.5% from its all-time high, indicating a possible shift in interest towards Bitcoin and altcoins. Analysts predict that a shift of 5% of capital from gold to Bitcoin could push Bitcoin price to $240,000.
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