Several key on-chain indicators indicate that the market has not yet entered the typical bull market "main wave". Both the MVRV Z-score and the Puell multiplier show that the market has risen but has not yet reached its historical high, while the 200-week moving average continues to provide strong support for prices, indicating that the market correction may be nearing its end.
We seem to have ushered in a new round of bull market that cannot be completely "cut the boat to find the sword". In particular, the introduction of spot ETFs has brought more institutional investment funds, increased market participation and liquidity, but also brought new complexities to the market.
In addition, with the political changes brought about by the US election, especially the expectations of crypto-friendly policies after Trump's victory, new volatility has emerged in the crypto market.
At this stage, the price of Bitcoin has broken through the long-term fluctuation range and has risen by about 40% in just ten days, from $66,800 to a peak of about $93,200. Market sentiment is unprecedentedly high, and various investors have entered the market, spreading optimism.
However, "when others are full of greed, we need to maintain a sense of awe for the market."
In this context, we might as well return to the on-chain data and re-examine the market status of Bitcoin to assess what stage this bull market has reached. By observing key on-chain indicators, we can more calmly analyze whether the market still has room for further upward movement or is gradually approaching a stage top. This rational perspective helps us stay sober in the market frenzy so that we will not be swept away by blind optimism in the continued heat of the bull market.
Bitcoin MVRV Z-value: Still optimistic
The MVRV ratio is one of the most popular and widely used chain indicators. The MVRV (Market Value / Realized Value) ratio is a commonly used on-chain analysis indicator that evaluates the "unrealized profit" or "unrealized loss" in the market by measuring the relationship between the market price and the realized price of Bitcoin. This indicator has become a key tool for Bitcoin market cycle analysis, used to find market highs and lows and identify turning points in the cycle.
The MVRV Z-score identifies extreme overvaluation or undervaluation of market prices relative to realized value. This indicator is usually represented by an orange line. When it enters the upper pink area, it means that the market is overvalued, which often occurs at the top of a bull market cycle; and when it enters the lower green area, it means that the market price is severely undervalued, which often occurs at the bottom of a bear market.
Currently, after a period of correction and rise, the MVRV Z value has not yet reached the extreme highs of previous bull markets. This position indicates that the market price of Bitcoin is in a relatively optimistic upward range, and there may be some room for the market to overheat or reach a cyclical high.
Puell Multiplier: Not Yet Peaked
The Puell multiplier is another indicator that is consistent with the cycle peak. This indicator calculates the ratio of current miner revenue to the average of the past 365 days. Miner revenue is mainly the market value of newly issued Bitcoin (the new Bitcoin supply will be obtained by miners) and related transaction fees. It can be used to estimate the miner's income.
The Puell multiplier is mainly used to measure the selling pressure of Bitcoin miners. Initially, the Puell multiplier only calculated the block rewards of miners. As the proportion of transaction fees in miners' income increased, Puell updated the formula to include transaction fees to reflect a more comprehensive miners' income.
The purpose of this indicator is to help traders understand the level of selling pressure from miners: when the Puell Multiplier enters the green zone, it means that the daily issuance value of Bitcoin is abnormally low, which is usually a good opportunity to buy the dip, and historically people have bought during these periods. Investors often receive outsized returns. Conversely, when the Puell Multiplier enters the red zone, indicating that miner income is significantly higher than historical norms, Bitcoin prices tend to reach highs at this time, which is a favorable time to take profits.
Previously, Bitcoin’s low was close to the green area, and it is currently in a slow rise phase, but it is still a long way from the high in the red area.
2-year MA multiplier or 200-week moving average heat map
Bitcoin's 2-year MA multiplier and 200-week moving average heat map are both indicators used to analyze the long-term trend of Bitcoin prices. The 2-year MA multiplier refers to the ratio between the Bitcoin price and its 2-year (about 24 months) simple moving average (SMA), which is used to measure whether the market price of Bitcoin deviates from the long-term average. It helps to determine whether the Bitcoin price is relatively overvalued or undervalued.
The 200-week moving average heat map visualizes the ratio of Bitcoin’s current price to the 200-week MA, reflecting the market’s “overheated” or “overcooled” state.
The heat map shows the cyclical fluctuations of the Bitcoin market. When the Bitcoin price is in the blue state for a long time, it means that the market is still in a relatively balanced state. When the heat map turns to green, orange or even red, it indicates that the market may be overheated, the price is far higher than the long-term average, and there may be a risk of price correction.
It can be seen that the current market is still in a relatively healthy state, and large-scale "FOMO" sentiment has not yet begun to spread.
Strong demand vs. crazy supply
The current Bitcoin market is in a stage of extreme opposition between demand and supply, reflecting the extreme volatility of market sentiment.
Especially driven by the excitement of American investors, strong demand has pushed Bitcoin prices to new highs. At the same time, the supply pressure in the market is also rising sharply. The continuous distribution of miners and long-term holders (LTH) has caused a large amount of "hot supply" in the market, which usually only occurs under extreme market sentiment, such as FOMO or panic.
In particular, on November 13, the surge in market supply broke through the high point in March this year, and the distribution of funds from the Grayscale ETF had not yet ended, but there is no similar event as a driving force today. This surge in supply is similar to the market panic period when Bitcoin fell to $16,000 in November 2022, showing a huge contrast in current market sentiment. The behavior patterns of long-term holders also further confirm the selling pressure in the market. Although there is no obvious peak signal yet, the continued distribution of LTH has pushed the market into the "medium risk" area, approaching the critical point of accelerated distribution.
Despite the increasing supply pressure in the market, strong demand still supports the upward trend of Bitcoin prices. In particular, since November 11, the surge in investor sentiment in the United States has become an important factor driving the price increase. Data shows that from October to November, the dominant force in the market shifted from Asia and Europe to the United States, and this shift made the driving force of the market more obvious. Along with the increase in demand, the market's profit-making ability is also rising rapidly, indicating that demand is not just a short-term phenomenon, but a strong driving force that has lasted for some time.
However, the "crazy" sentiment in the market also reminds us that although there is no obvious peak signal at present, there may be a risk of bubble behind the excessive supply and growing demand. When the demand and supply of the market reach a critical point at a certain moment, the bursting of the bubble may happen at any time. Investors should remain rational and alert at this time, realize the unpredictability of the market, and avoid getting lost in the frenzy. Therefore, although there seems to be room for growth in the short term, the imbalance between supply and demand in the market may indicate potential risks in the future.
Especially in the current Shanzhai market, first, there is no liquidity, and second, there is no sustained demand to support it. It depends on your entry position. If you enter at a low position, you can hold it. If you are chasing it recently, you can just play short-term and leave when you have made enough money. Don't talk about the current Shanzhai market.
I also publicly called out the People coin in the member group and Weibo. At that time, the position was 63. Today, the profit has reached 40%. It is also a timely reminder for everyone to reduce positions and sell. Basically, it has reached a stage top. If it is not sold, it will be another roller coaster ride.
And as we can see from the current market situation, if Ethereum or Bitcoin moves slightly, the altcoins will fall by 10%-20%, so we really don’t need to worry about the current market situation.
