Bitrabo Editorial
After a tumultuous mid-week period, Bitcoin (BTC) finished the past week positively, achieving a notable 4.07% increase according to CoinMarketCap. This performance helped BTC continue its upward momentum from the week prior, during which it surpassed the $60,000 threshold. Nevertheless, there remains significant uncertainty about whether Bitcoin has actually entered a bullish phase in the market.
Related Reading: Bitcoin Bull Run Begins: Expert Anticipates Significant Upswing in Upcoming Months
Analyst Indicates MVRV Ratio Critical for Bullish Trend in Bitcoin
On Friday, crypto analyst Ali Martinez highlighted a market factor that could indicate a return to bullish conditions for BTC. In the past two weeks, Bitcoin’s price rose by over 23%, from approximately $52,800 to a maximum of $64,041.
Martinez emphasizes that for Bitcoin to confirm a bullish trend, its Market Value to Realized Value (MVRV) ratio must exceed its 90-day moving average, particularly after a period of stagnant growth observed in July and August. The MVRV ratio serves as a measure of market trend, where a high ratio suggests possible overvaluation, while a low ratio implies undervaluation.
If Bitcoin’s MVRV dips below its 90-day moving average, it typically signals a correction or bearish phase, where investors may experience unrealized losses, leading to negative market sentiment. Conversely, an increase in MVRV above this moving average indicates bullish trends as Bitcoin’s value climbs above historical averages.
Martinez asserts that this positive scenario is essential for Bitcoin to affirm its shift to a bullish trend despite recent market upticks. Should the favorable condition occur, Bitcoin could potentially rise to between $68,000 and $70,000, which represents the next major resistance level. In such a case, Bitcoin might experience a generally favorable performance in September, a period often associated with negative returns.
New $2 Billion in BTC Futures Contracts Could Lead to Long Squeeze
In other developments, Bitcoin traders have engaged in about $2 billion worth of futures contracts over the last two days, following the asset’s recent price increase. This signifies strong market interest in Bitcoin but also highlights a substantial increase in leveraged trading positions. According to Ali Martinez, this scenario may pose a long-squeeze risk. If Bitcoin’s price declines, traders holding these leveraged positions may face forced liquidations, which would likely exert downward pressure on the price of Bitcoin.
As of now, BTC is trading at $62,875, reflecting a 1.59% decrease over the past day. Additionally, the daily trading volume of the asset has fallen by 16.75%, amounting to $36.4 billion.
Image credit: The Motley Fool, chart from Tradingview