The Bitcoin On Chain Indicator shows that the Bull Run will continue in 2017

Bitcoin‘s retreat from the $ 67,000 all-time high (ATH) to below $ 60,000 hasn’t stopped the bulls from keeping an eye on other ATH levels, according to an indicator that predicts market lows and highs.

The risk figure, known as MVRV, represents the ratio of the market value of Bitcoin to its true value – similar to the price-to-book ratio (P / B), which compares the market value of bitcoins to its book value. MVRV tries to determine whether the property is undervalued or overvalued.

Bitcoin will go up like 2017

An MVRV index above 3.7 warns of a sharp spike in Bitcoin that will lead to a sell-off. On the flip side, an MVRV under 1 buying pressure on the prospect implies that Bitcoin is bottoming out.

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

Bitcoin Price vs MVRV | Source: CryptoQuant

Lennard Neo, Head of Research at Stack Funds, explains in a new report released Nov. 4th that the current MVRV rebound is similar to what happened during the 2017 bull run, and to a series of higher highs and higher lows (green) that confirm Bitcoin’s uptrend.

Additionally, the MVRV similarly rebounded from the decline in May 2021, and a fall below 1 suggests that the Bitcoin market was undervalued during that period. The index has rallied well to hit higher highs and higher lows, confirming Bitcoin’s uptrend.

“With an MVRV currently at 2.72, far from its recent high of 3.96 in February, we expect more uptrend as it retests 4 not far away,” Neo wrote in a report released in November.

Bitcoin Towards $ 70,000?

Neo added that Bitcoin’s recent ability to hold the $ 60,000 support level suggests it is poised to retest $ 67,000 or even expand towards $ 70,000.

The analyst cited two on-chain metrics beyond the MVRV to explain his bullish outlook. This includes indicators that track balances across all crypto exchanges and wallets that contain large amounts of Bitcoin.

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

Bitcoin is held on all exchanges | Source: CryptoQuant

Large investors also accelerated accumulation as Bitcoin price rebounded from the May-July 2021 crash.

According to Glassnode’s whale supply shock indicator, so-called whales – addresses holding between 10,000 and 100,000 BTC – increased Bitcoin purchases during the post-July rebound of less than $ 30,000.

Bitcoin whale supply shock | Source: Glassnode

Dor Shahar, an on-chain analyst at CryptoJungle, calls this a sign of a “multi-month cumulative upward trend” and predicts a new record high for Bitcoin as whales withdraw more BTC.

“The ratio between the two groups of whales and juveniles gives a measure of the supply dynamics,” said Dor Shahar, adding:

“As a result, the indicator can help visualize the potential supply shortage of whales and their impact on prices. There is also a more sensitive macro indicator. “

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Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

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