- BTC’s key metric presents a buying opportunity.
- However, bearish sentiments in the market remain significant.
Bitcoins [BTC] Market value to realized value (MVRV) has given a buy signal, crypto analyst Ali Martinez has done noted in one after on X (formerly Twitter).
According to the analyst, the token’s MVRV ratio, assessed over its 30-day moving average, returned a negative value of -11.6%.
Source: Santiment
This metric tracks the relationship between the current market price of an asset and the average price of each coin or token purchased for that asset.
When it returns a value above one, it suggests that the market value of an asset is significantly higher than the price at which most investors acquired their holdings. When this happens, the asset is said to be overvalued.
On the other hand, a negative MVRV value indicates that the asset in question is undervalued. It suggests that its market value is lower than the average purchase price of all tokens in circulation.
Martinez reviewed the historical pattern of BTC’s MVRV ratio (30d) and found that the last three times the value fell below -9%, the coin’s price rose by 64%, 63%, and 99% respectively.
According to Martinez, a double-digit rally could be in store for the leading coin as the MVRV ratio is now below the critical limit of -9%.
Is a rally feasible?
Measurements of the currency’s movements on a daily chart showed that it broke below support on April 30, indicating that the bears were in control.
Some of the key technical indicators observed confirmed the significant decline in bullish sentiment. For example, BTC’s Elder-Ray Index has returned only negative values since April 24.
The indicator measures the relationship between the strength of the buyers and sellers of an asset. When the value is negative, bear power dominates the market.
Likewise, the coin’s positive directional index (green) was below the negative index at the time of writing. This showed that selling activity exceeded coin accumulation among market participants.
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In terms of BTC demand, the Relative Strength Index (RSI) and Money Flow Index (MFI) were trending downward at the time of writing. The RSI was 31.74, while the MFI was 39.71. These values showed that the coin was heading into the oversold zone of the market.
If the selling momentum increases, the bears could push the price of the coin to $52,000 and then to $47,000.
Source: BTC/USDT on TradingView
