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On-Chain Metrics May Point to Underlying Bullishness for Bitcoin

Avatar Cole Petersen 9 months ago

The past week has proven to be quite volatile for the crypto market, with multiple major altcoins posting major gains while Bitcoin traded sideways within the lower-$10,000 region. Yesterday, however, this bullish momentum grinded to a halt when Bitcoin (BTC) plummeted below $10,000, which may spell trouble for the markets in the near-term.

In spite of this potential bearishness, one prominent crypto analyst is now noting that one piece of on-chain data may signal an underlying bullishness for the cryptocurrency, which may mean that today’s drop is simply a flash in the pan that is ultimately followed by an extension of its recent established upwards momentum.

Bitcoin Dips Below $10,000 in Sharp Overnight Movement 

At the time of writing, Bitcoin is trading down nearly 3% at its current price of $9,920, which marks a slight retrace from its 24-highs of $10,300 and an even steeper drop from its weekly highs of nearly $10,500.

Bitcoin’s inability to maintain its position within the five-figure price region certainly signals that bears may currently have a slight edge over bulls, and it also points to the possibility that BTC will once again revisit its historically established support level around $9,300.

In the near-term, it does appear that BTC’s bulls and bears are currently locked in a tight battle, and the low-$10,000 region may mark a turning point where the crypto’s near-term trend grows increasingly clear.

The Cryptomist, a popular crypto analyst on Twitter, spoke about the importance of this level, explaining that she expects BTC to move upwards towards $10,050, which is where it may once again incur significant selling pressure that sends it reeling lower.

“$BTC: There was the drop mentioned. However, am little surprised at the strength of the bulls. I do see bulls pushing this back up to 10050 range, where we could load up for another drop. No bias however, waiting for 10050,” she explained.

On-Chain Data May Bolster BTC’s Bulls

Despite its seemingly bearish price action in the near-term, it is important to note that Bitcoin’s on-chain data may point to further bullishness in the near-term.

Luke Martin, a prominent analyst, spoke about this in a recent tweet, explaining that BTC’s MVRV ratio may provide positive data for the crypto’s bulls.

“With $BTC continuing its month-long chop, I’ve been learning more about on-chain metrics. MVRV ratio gives a good idea of exchange price relationship to “fair value” of a Bitcoin. MVRC <= 1 has been an excellent buy every time,” he explained while pointing to the below chart that shows that Bitcoin’s MVRC is currently well below 1.

The coming days and weeks will likely prove to be quite illuminating as to what direction Bitcoin will trend in the coming days and weeks, and its near-term price action could even set the tone for the rest of 2019.

Featured image from Shutterstock.
Cole Petersen

Cole is a cryptocurrency analyst based in Los Angeles. He studied at the University of California Irvine and has been interested in Bitcoin and the crypto markets since 2013.

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