Two Key Bitcoin Metrics Indicate Sustained Bull Cycle No Bubble Evident

August 22, 2024 09:33 PM AEST | By Team Kalkine Media

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Two Key Bitcoin Metrics Indicate Sustained Bull Cycle No Bubble Evident — Image source: Shutterstock

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Bitcoin’s current price metrics suggest that it is not overvalued and its price movement remains steady, with no significant anomalies or sharp fluctuations, according to recent analysis.

CryptoQuant researcher Axel Adler examined two key metrics in an August 18 report: the bubble vs. crush market structure and the MVRV-Z score. These indicators provide insight into Bitcoin's market health and price trends.

The bubble vs. crush market structure score, which measures the ratio of Bitcoin (BTC) market capitalization to its realized capitalization, has dropped to 1.02. This score, deemed the baseline, indicates that Bitcoin is not currently in a market bubble. During Bitcoin's peak in March, when it reached an all-time high of $73,679, this score was around 1.5, signaling an overheated market. Subsequently, Bitcoin's price fell by 16% in a short period.

Despite struggling to hold the $60,000 level, which is a key point of interest for traders, Bitcoin has been fluctuating within a range from approximately $49,842 to $69,799 since July 22. At the time of this report, Bitcoin was trading around $59,236.

Adler also noted that Bitcoin’s 30-day moving average MVRV-Z score is at 1.8, slightly above the annual average of 1.6. This metric indicates minimal overvaluation. Historically, when this score surged significantly, it often preceded major price corrections. For instance, in March 2021, the score reached above five before Bitcoin’s price eventually declined by 45% over the following months.

These metrics suggest that as long as the bubble vs. crush score and the MVRV-Z score remain within moderate levels, the market can be viewed as bullish without significant risk of a sharp correction.

Recent comments from traders reflect a broader consensus on Bitcoin’s current phase. Some view it as a period of consolidation typical before and after significant events like the halving. Others suggest that Bitcoin might be poised for upward movement in the coming months, based on historical patterns and recent technical analysis.

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