According to two widely-used indicators among crypto market observers, Bitcoin (BTC) might be approaching a favorable buying opportunity based on its on-chain data.
“The MVRV ratio and funding rate based on open interest may indicate that Bitcoin’s current price represents a good buying opportunity for traders.”
In a recent post on X addressed to his 94,100 followers, the anonymous trader known as Mister Crypto expressed that this is the ideal time to purchase Bitcoin.
The cost of keeping Bitcoin futures positions, represented by its OI (Open Interest) weighted funding rate, became positive for the first time in 24 hours on April 24, according to data from CoinGlass, sitting at 0.0093%.
Although it has increased, the rate remains much lower than the 0.0714% measured in early April, which some analysts consider beneficial for the market.
In a recent post on April 24, on-chain analyst Checkmate expressed his viewpoint, saying, “I’ve seen some really healthy market resets in a while, and this is one of them.”
“Bitcoin rates remain steady. It’s poised for takeoff, according to Crypto Banter’s Kyle Doops in a recent update on April 24th.”
An uptick in funding rates implies greater demand for long positions, suggesting a more optimistic outlook among traders in the market.
In early March, when Bitcoin’s open interest (OI) funded rate reached a notable peak, Bitcoin hit its record high of $69,200 on that very day.
Around a week after that, on March 14, the price broke through the milestone once more, reaching $73,835 according to information from CoinMarketCap.
Charles Edwards, Capriole Investments’ founder, shared with CryptoMoon that while funding rates serve as a useful guideline “in general terms,” their predictive power has weakened compared to a few years ago.
“2018 through 2020 and 2021, that sort of three year window it wasn’t talked about much. It wasn’t understood and it was a hundred percent hit rate metric, where if it went negative it was almost a hundred percent guaranteed, if you went long you would make money.”
According to Edwards, the involvement of more parties makes the metric more intricate to evaluate now.
At the same time, the MVRV (Moving Average Realized Value) indicator indicates that Bitcoin may be underpriced based on its historical data, signaling potential opportunities for purchasing.
Currently, the MVRV value of Bitcoin when it was published stands at 2.32. This represents a decrease of 6.45% compared to the beginning of April, according to data from LookIntoBitcoin.
A Market Value to Realized Value (MVRV) score greater than 3.5 indicates that the market may be close to reaching its peak, while an MVRV score under 1 implies that the market might have already hit its lowest point.
Edwards noted that the present MVRV levels imply “there’s still plenty of room for price movement in the coming twelve months.”
Instead, he noted that the present chance to buy is significantly less profitable than it was just two years ago.
“It’s not a deep value opportunity that it was a year ago or two years ago when it was way lower. But it’s also not screaming “over valuation” which is four, or five or six.”
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2024-04-25 09:10