June 24, 2021

Bitcoin Could Rise $20,000 Prior to Overbought Territory

3 min read

After a year-to-date return of over 80%, some analysts alert that Bitcoin is approaching overbought territory. Still, a specific on-chain metric suggests that BTC is primed for another massive increase.

Market Value Up By 60%

Bitcoin’s market price has actually risen by nearly 60% given that the start of the month. BTC was just recently able to reach a brand-new all-time high of $52,800 as a new age of retail investors flocked to the coin.

More than 20,000 new addresses have signed up with BTC’s network every day over the previous five weeks, signaling a spike in user adoption. It appears that Tesla’s $1.5 billion Bitcoin investment put Bitcoin in the spotlight as trust in the worldwide monetary system erodes.

Bitcoin Looks “& ldquo;

Unsustainable & rdquo; Despite the huge gains that BTC has actually published over the past month, some analysts think that a major correction is underway.

JP Morgan’s Global Market Strategist Nikolaos Panigirtzoglou has suggested that Bitcoin “& ldquo; looks unsustainable & rdquo; at the existing price levels. Panigirtzoglou maintains that an inelastic supply of Bitcoin resulted in a rate premium for both “& ldquo; real cash & rdquo; and & ldquo; speculative & rdquo; financiers, while retail interest dwarfing the institutional inflows.

For this reason, the expert expects that volatility would need to reduce to sustain the recent upswing.

Plenty of Room to Go Up

Despite the grim worst-case situation, Bitcoin looks basically strong. Whales have actually gotten in a buying spree, diminishing the amount of Bitcoin available on exchanges and trading platforms. Market behavior of this type minimizes the selling pressure behind the cryptocurrency, as a result topping its downside capacity.

Bitcoin Balance on Exchanges by Glassnode Furthermore, the MVRV Z-Score recommends that Bitcoin has lots of room to increase prior to it reaches overbought area. This basic metric represents the ratio between the distinction of Bitcoin’s market capitalization and recognized capitalization and the standard deviation of market capitalization. Each time this on-chain index rose above a value of 9 over the previous 10 years, it acted as a sell signal resulting in a high correction. For example, the MVRV Z-Score rose to a high of 9.80 in mid-December

2017 when Bitcoin peaked at nearly$ 20,000. Following this turning point, Bitcoin rates suffered an 84%correction while the MVRV Z-Score had the ability to reset. Bitcoin MVRV Z-Score by Glassnode Now that Bitcoin is trading at a record high, the MVRV Z-Score is hovering at a worth of 6.60. If this indication proves to be as precise as it remained in previous circumstances, BTC could climb up another $10,000 to $20,000 prior to the market ends up being overheated.

Next Cycle May Look Like 2013

Technical analyst Philip Swift thinks that the ongoing bullish cycle may look similar to the one in 2013, when Bitcoin struck the MVRV Z-Score’s red zone two times prior to a substantial retracement took place.

Swift preserves that BTC could even reach 3 regional tops throughout this cycle before it goes into a meaningful corrective duration.

Disclosure: At the time of writing, this author owned Bitcoin and Ethereum.