Cryptocurrency
Is Bitcoin’s Rally Overstretched? This Key Indicator Says No
Is Bitcoin’s Rally Overstretched? This Key Indicator Says No: CoinDesk reports, “A historically reliable fundamental analysis indicator suggests bitcoin’s rally has scope to continue after its rapid rise to new 2020 highs, contradicting signals on the technical charts. While bitcoin’s ‘market value to realized value’ (MVRV) Z-score is hovering at two-year highs at 2.12, according […]
By Chris Sykora · October 28, 2020
Is Bitcoin’s Rally Overstretched? This Key Indicator Says No:
CoinDesk reports, “A historically reliable fundamental analysis indicator suggests bitcoin’s rally has scope to continue after its rapid rise to new 2020 highs, contradicting signals on the technical charts.
- While bitcoin’s ‘market value to realized value’ (MVRV) Z-score is hovering at two-year highs at 2.12, according to data source Glassnode, that’s still well below the 7.0 score at which an asset is considered near a top.
- The MVRV Z-score measures the deviation of market value from realized value, and is used to assess undervalued and overvalued conditions.
- Put simply, the cryptocurrency is slightly overvalued but still has plenty of room to extend the run of gains from the low of $3,867 seen since mid-March.
- The indicator backs up with billionaire hedge fund manager and philanthropist Paul Tudor Jones’ recent comments that bitcoin’s rally has just begun.
- Historically, an MVRV Z-score below zero has marked bear market lows, while a reading above 7 has marked major bull market tops.
- The Z-score fell below zero, indicating undervalued conditions following the March 12-13 crash, which saw prices fall as low as $3,867.
- Since then, the cryptocurrency has largely stayed on an uptrend…”