Bitcoin price showed a dizzying display of bearish pressure over the past week. When the leading cryptocurrency lost its position around the $84,000 support level, it entered a slippery slide and reached around $60,000. Currently, the market is in a recovery mode, with the price rising again to $70,000. Interestingly, an assessment of the chain has recently emerged, lending more credence to expectations of a price rebound.
MVRV data shows that the Bitcoin market is under ‘severe stress’
In one QuickTake post on CryptoQuant, popular market analyst Darkfost postulates that the recent Bitcoin price action has provided an apparently strong buy signal. This is based on data from the Bitcoin: MVRV Percentile – Current Cycle (0-100%) indicator. For context, this metric shows where Bitcoin’s current MVRV ratio ranks in the current cycle, compared to all past values. This serves as a means of identifying whether the market is historically undervalued or overheated.
According to Darkfost, the MVRV is within the percentile of 0 to 10%. This is a remarkably low level for the current Bitcoin cycle, as the MVRV has maintained higher levels than its current value for more than 90% of the period of this cycle.
In practice, measurements around this level indicate that the majority of Bitcoin holders are doing so with minimal unrealized gains, or even outright losses, compared to their cost basis. This is often a telltale sign that the Bitcoin market has experienced a period of extreme stress, accompanied by multiple liquidations and investor exhaustion. However, this period is only part of a broader cyclical trend. Darkfost explains that the Bitcoin market (like other major assets) tends to enter overheated phases, followed by corrections, and then overloaded phases, which often precede bullish recoveries.
Notably, transitions outside the 0-10% MVRV range have often been followed by price stabilization and ultimately an upward move. On the other hand, the 90% zone often represents overheated market conditions, which precede heavy profit-taking and subsequent corrections. While MVRV data by itself does not uniquely confirm that Bitcoin price would stage a full recovery, it does indicate strong potential for a positive momentum boost to regain key valuation levels.
Bitcoin price overview
At the time of writing, Bitcoin is trading for around $67,855. The world’s largest cryptocurrency has recovered more than 4.00% in the past 24 hours, according to data from CoinMarketCap. Meanwhile, daily trading volume is down 38.16% and valued at $88.37 billion.