Key Points:
The MVRV ratio of Bitcoin has fallen below its 365-day average, indicating a local bottom, which historically often signals a significant price increase.
Analysts believe that a rotation of funds from gold may drive a recovery in Bitcoin.
Bitcoin (BTC) may experience a sustained recovery in the coming weeks, as key valuation indicators have issued bullish signals. Crypto analysts suggest that the Bitcoin market may be forming a "cyclical bottom."
The Bitcoin market cap to realized value (MVRV) ratio is an indicator that measures whether an asset is overvalued, and it has recently fallen below its 365-day moving average. According to CryptoQuant analyst ShayanMarkets, this suggests that Bitcoin may be at a local bottom.
As the analyst pointed out in a quick commentary on Monday: "The MVRV ratio is currently close to 1.9, slightly below its 365-day moving average." He added:
Similar situations occurred in mid-2021, June 2022, and early 2024, after which Bitcoin prices saw increases of 135%, 100%, and 196%, respectively.
This ongoing pattern indicates that Bitcoin has once again "entered an undervalued phase, where long-term holders typically begin to accumulate," the analyst stated.
On Friday, Bitcoin's price dropped 18% from its historical high of $126,000 to $103,530, leading to a decline in the MVRV ratio. The analyst added that this reflects a reduction in speculative excess and an increase in long-term confidence.
If history repeats itself, Bitcoin's price is expected to continue recovering. Analysts anticipate a short-term target around $115,000; if the bull market enters its final phase, it could even reach $190,000.
Data from Cointelegraph Markets Pro and TradingView shows that gold has fallen 8.5% since hitting a historical high of $4,380 on Monday.
Michaël van de Poppe, founder of MN Trading Capital, stated on social media platform X on Tuesday that this is "a rather severe correction for gold."
If this trend continues, it indicates a "cyclical top" for gold and serves as a signal for liquidity to flow into Bitcoin and other cryptocurrencies, van de Poppe noted.
The U.S. Bureau of Labor Statistics is expected to release the September Consumer Price Index (CPI) report on Friday.
According to analysts: "Moderate CPI data should provide momentum for potential rate cuts and an end to the government shutdown." With a return of risk appetite, Bitcoin is expected to start rising.
Meanwhile, Bitwise analysts suggest that a 5% shift of capital from gold to Bitcoin could drive Bitcoin's price to $240,000.
Bitwise says a 5% capital rotation from gold to Bitcoin could send BTC to $242,391 👀 pic.twitter.com/FwvjneWhdX
According to Cointelegraph, a continued pullback in gold could trigger a rebound in Bitcoin, with technical analysis predicting that Bitcoin's price could rise to between $150,000 and $165,000 by the end of the year.
Related: Bitcoin (BTC) whales quietly embrace BlackRock ETF after SEC rule changes
Original article: “Bitcoin (BTC) MVRV Ratio Suggests ‘Cyclical Bottom’ Forming Below $110K”
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