Bitcoin has been on a sustained rise over the past week, but is there reason for analysts to be optimistic?
Bitcoin is up 10.38% on the monthly charts.
Analysts are looking for further upside, pointing to the historical relationship between MVRV and SMA 365.
Over the past 30 days, Bitcoin (BTC) has seen a significant recovery in its price charts after two months of extreme volatility. In fact, since hitting a high of $70,016 in July, Bitcoin has fallen significantly, even falling to a local low of $49,000.
However, since the Fed cut interest rates a week ago, Bitcoin has made significant gains. At the time of writing, Bitcoin was trading at $65,839. This represents a 10.38% gain on the monthly charts, extending the uptrend with a 4.47% gain in 24 hours.
Will King Coin continue to rise?
This recent surge has caught the attention of the crypto community, getting analysts talking. One such analyst is Burak Kesmeci, an analyst at Cryptoquant, who suggested that the long-term rally could continue, citing the MVRV metric.
According to Kesmeci, Bitcoin’s MVRV metric is now sending a bullish signal again, with MVRV pricing above its 365-day simple moving average. After analyzing the historical relationship between MVRV and its 365-day moving average, the analyst determined that BTC typically posts a rally after MVRV rises above its 365-day simple moving average.
At the time of writing, the stock’s market average was at 2.04, which is above its 365 simple moving average at 2.02. Therefore, the analyst interpreted this as a strong bullish signal, assuming that bulls have something to lose in the market.
When MVRV and SMA 365 are aligned like this, it means that the long-term trend is strengthening. Especially since the current market cap of Bitcoin is higher than its average value achieved over the past year. This upward movement is a sign of growing confidence among coin holders and long-term investors.
Therefore, based on this observation, Bitcoin may see higher demand, which may lead to higher prices.
What do the charts say?
While the metric highlighted by Kisimichi provides a positive outlook, the question is what do the other fundamentals say?
For starters, the cryptocurrency supply ratio has been on a steady decline over the past week. During this period, the cryptocurrency supply ratio dropped from 0.1311 to 0.1304.
This decline reflects the behavior of investors to keep their assets in cold wallets, rather than on exchanges. This is a bullish signal, which means investors are confident in future values as long-term cryptocurrency holders expect the cryptocurrency price to rise.
In addition, Bitcoin’s Flow Rate has been on an upward trend over the past week. Bitcoin’s Flow Rate has increased from 0.04 to 0.086 over the past seven days.
This is a sign of greater inflows of funds into Bitcoin. Hence, it reflects the growing confidence among investors. Under these market conditions, investors are likely to buy Bitcoin in the hope of future gains.
Finally, Bitcoin’s short-term ROI has also been rising over the past week. A high short-term ROI during an uptrend shows that the market is strong. Therefore, even though short-term holders are selling at a profit, demand is also high enough to absorb the selling pressure without causing a decline. This means that the uptrend is likely to continue.
Simply put, Bitcoin is experiencing a positive market condition and rising investor preferences. If these market conditions persist, Bitcoin will attempt to break through the $68,240 resistance level.
