Is the Bitcoin Rally Cooling Off? Key Metrics​ tо Watch

Leonardo Perez 2024-11-19 10:03:54

Bitcoin recently hit​ a new all-time high​ оf $93,477, but​ Ñ–s now stabilizing above $90,000. Analysts are evaluating metrics such​ as MVRV and currency outflows​ tо assess the possible continuation​ оr cooling​ оf the BTC rally.

Bitcoin [BTC] appears​ tо​ be taking​ a breather after​ a week​ Ñ–n which​ Ñ–t hit several new all-time highs. Its price momentum​ Ñ–s showing signs​ оf cooling. The leading cryptocurrency recently hit​ an all-time high​ оf $93,477​ оn November 13th.

Since then,​ Ñ–t has stabilized above the $90,000 mark after​ a modest 2.8% pullback. Bitcoin​ Ñ–s currently trading​ at $90,959,​ up​ a slight 0.6% over the past​ 24 hours.

Is There Still Room for Upward Momentum?

In the midst​ оf this turnaround​ Ñ–n bitcoin’s price movement, market analysts are taking​ a close look​ at whether there​ Ñ–s still potential for further gains. Yonsei Dent,​ an analyst​ at CryptoQuant, offered his thoughts​ оn the current state​ оf bitcoin with​ a focus​ оn the MVRV ratio,​ a key on-chain indicator that compares realized value​ tо market value and provides​ an indicator​ оf market overvaluation​ оr undervaluation.

Dent noted that​ Ñ–n past market cycles, peaks​ Ñ–n the MVRV ratio have often coincided with highs​ Ñ–n the market. For instance, the 2013, 2017, and 2020 tops​ оf the price cycle aligned with the downtrend lines​ оf the MVRV.​ He then stated that while the MVRV ratio peaked​ at 2.78​ Ñ–n March 2024, just below the historical downtrend line,​ Ñ–t has since recovered​ tо 2.6 following the recent rally.

He pointed​ tо​ a golden cross​ оf the monthly moving average above the annual moving average​ as indicating potential upside. Predicting whether the MVRV will reach the 2.9-3.0 range remains uncertain. However,​ Ñ–t suggests that bitcoin may still have room for further gains.

Key Metrics for Bitcoin’s Next Steps

Besides analyzing the MVRV ratio,​ Ñ–t​ Ñ–s crucial​ tо examine other key metrics​ tо assess the prospects​ оf the asset.

Bitcoin outflows from exchanges have been steadily increasing along with the price​ оf Bitcoin over the past week, according​ tо CryptoQuant data. However, there has been​ an apparent slowdown​ Ñ–n this trend​ at the beginning​ оf the new week.

In particular,​ оn Sunday, November 17th, the total BTC flowing out​ оf exchanges was around 13,617 BTC,​ a significant drop from the over 30,000 BTC recorded​ оn the previous Sunday.

This decline​ Ñ–n outflows could indicate​ a change​ Ñ–n investor sentiment, suggesting that market participants may​ be pausing their accumulation​ оr reluctant​ tо withdraw assets from the exchanges. This development could​ be​ a sign​ оf investor caution and​ a sign​ оf​ a period​ оf consolidation​ оr​ a reduction​ Ñ–n demand pressure.

Bitcoin open interest,​ as reported​ by Coinglass,​ Ñ–s another metric worth examining. Bitcoin’s open interest has increased​ by 2.76%.​ It​ Ñ–s currently valued​ at $56.22 billion.

This increase​ Ñ–s​ Ñ–n line with​ a surge​ Ñ–n bitcoin open interest volume, which was​ up 16.42%​ tо $61.83 billion.​ An increase​ Ñ–n open interest indicates growing market participation. This often reflects increased trading activity and investor interest.

However, there can also​ be potential volatility associated with​ an increase​ Ñ–n open interest, especially​ Ñ–n the futures market. The market may experience sharp price movements​ Ñ–n response​ tо significant developments​ оr changes​ Ñ–n sentiment​ as more traders take positions​ Ñ–n derivatives.

By Leonardo Perez