• On-chain metrics suggest a Bitcoin bottom is near, with the Supply Profit and Supply Loss lines converging and then diverging.
• Market Value to Realized Value (MVRV) is split by long-term and short-term holders, with Long-Term Holders (LTH) typically leading the market up and down.
• Macro factors not present in previous Bitcoin cycles may impact the current cycle, making it difficult to predict the exact bottom.
The recent on-chain Bitcoin metrics suggest a market bottom may be near. CryptoSlate revisited several Glassnode metrics that continue to indicate a bottoming of price. For example, the Supply Profit (SP) and Supply Loss (SL) lines have converged around Q4 2022 and then diverged, which has correlated with price reversals in the past.
The Market Value to Realized Value (MVRV) metric is further split by long-term and short-term holders, with Long-Term Holders (LTH) typically leading the market up and down. The LTH MVRV ratio is especially useful in determining whether the market is under or overvalued, as it shows the ratio of the Bitcoin market cap to the value stored in the current circulating supply. This ratio currently shows that Bitcoin is undervalued and could potentially lead to a price reversal in the near future.
While these on-chain metrics suggest that the Bitcoin market bottom may be near, there are macro factors at play that may affect the current cycle. For instance, the recent introduction of institutional investors into the market may influence the bottom, as larger players can manipulate prices to their own benefit. It is also difficult to determine if the current cycle will play out the same as past cycles, as there is no guarantee that the patterns will hold.
Overall, while on-chain metrics may be signaling a Bitcoin bottom, it remains to be seen if the current cycle plays out the same as past cycles. Investors should be mindful of macro factors that could potentially influence the market, and make their investment decisions accordingly.