The on-chain bitcoin index suggests the 2017 style bull run will continue

Bitcoin’s (BTC) rebound from record highs of $ 67,000 to below $ 60,000 hasn’t stopped the bulls looking to another high ahead, according to an indicator that seeks to predict BTC lows and highs.

The risk metric known as MVRV represents the ratio of BTCs market value to its true value – similar to the price-to-book ratio (P / B), which compares a company’s market value to its book value. MVRV tries to determine whether the content is undervalued or overpriced.

A bullish setup like 2017

An MVRV read above 3.7 warnings of BTC coming, resulting in a sell-off. On the other hand, an MVRV reading below 1 implies buying pressure on the prospect that BTC is bottoming out.

MVRV assisted Bitcoin traders in identifying selling and buying pressures in theBTC market. For example, the orange overlays in the graph below represent the correlation between BTC price and its MVRV output.

Lennard Neo, Head of Research, explains in a new Stack Funds report released Nov. 4th that the current MVRV rally is similar to the one spotted during the 2017 bull run on rising price.

Additionally, the MVRV similarly rallied after the price crash in May 2021, and a drop below 1 suggests that the Bitcoin market was undervalued during that period. The index has rallied well to hit higher highs and lower lows, confirming Bitcoin’s uptrend.

“With the MVRV currently trading at 2.72, far from its recent high of 3.96 in February, we expect more upside as it retests the 4.0 handle.” Neo wrote in a November 4th published report, adding:

“If the MVRV uptrend takes place in the near future, BTC’s peak will likely be over.”

Bitcoin to $ 70,000?

Neo adds that BTC’s recent ability to hold $ 60,000 as its support level shows its strong willingness to retest $ 67,000 – or even expand the move to $ 70,000.

The analyst referred to two on-chain metrics from MVRV to explain his bullish outlook. This includes indicators that track BTC balances across all crypto exchanges and wallets that contain large amounts of BTC tokens.

Specifically, the total number of Bitcoins held by exchanges worldwide reached 2,311 million BTC, the lowest level in more than three years.

BTC’s largest investors also accelerated their accumulation as BTC price rebounded from the May-July 2021 crash.

According to Glassnode’s Whale Supply Shock indicator, so-called whales – addresses at 10,000 and 100,000 BTC – increased their Bitcoin purchases during the post-July rebound from below $ 30,000.

Dor Shahar, a chain analyst at CryptoJungle, Is called it is a sign of a “cumulative multi-month uptrend” predicting new record highs for Bitcoin as whales withdraw more BTC supply.

Related: Bitcoin Whale Indicator Detects Multi-Month Accumulation Trend As BTC Sees A $ 67K Retest

“The relationship between the two groups; Whales and other fish provide a measure of supply dynamism, ”he said, adding:

“So, [the indicator] can help visualize potential supply bottlenecks for whales and their impact on prices. That makes a more sensitive macro leading indicator. “