As a seasoned crypto investor with a few battle scars and successes under my belt, I always keep a keen eye on market indicators to gauge the health of my investments. The recent analysis by CryptoQuant has caught my attention, especially the MVRV ratio flashing a potential warning sign. While it’s currently below the 3.7 threshold that typically indicates a peak valuation, it’s important to remember that even a slight increase could trigger a significant market response.
According to the data service CryptoQuant, one clear sign that Bitcoin’s price might be approaching its peak has been triggered. This signal is one of five crucial warnings that typically precede a high in Bitcoin’s value.
On November 19th, as per a recent post by CryptoQuant, they highlighted key signals to keep an eye on when determining if Bitcoin’s price might be approaching an unsustainable point.
MVRV Ratio
The first signal is the “MVRV ratio,” which measures Bitcoin’s market value — the sum of all coins that have been mined — against its realized value, the sum of the latest selling price of all Bitcoin in circulation.
According to CryptoQuant, when the value exceeds 3.7, it usually means Bitcoin’s current peak valuation has been reached. As of now, based on CoinGlass data, the score stands at 2.67.
Back in February 2021, I found myself in an exhilarating position as the Market Value to Realized Value (MVRV) ratio of Bitcoin skyrocketed to a staggering 7. This astronomical figure coincided with Bitcoin’s historic surge, reaching approximately $60,000. It was truly a thrilling time for any crypto investor!
Fear & Greed Index overheats
The next indicator to watch is the Crypto Fear & Greed Index, which measures market sentiment.
According to CryptoQuant, if the index reaches 80 out of a possible 100 (alongside other factors), it might suggest that Bitcoin is approaching a short-term peak.
Since November 12, the index has consistently remained over 80, peaking at a record high of 90 on both November 17 and 19. This is the highest it’s been since February 2021.
New money inflows
The third indicator focuses on the amount of fresh funds entering the market; if there’s a lack of “new capital inflow,” the value of cryptocurrencies usually slows down and may eventually decline.
According to CryptoQuant, the chart showing the growth of Bitcoin’s realized capital is an excellent indicator for tracking the amount of funds entering the market. At present, this chart indicates that the influx of fresh funds remains relatively substantial, suggesting that Bitcoin is currently experiencing a “bull run” or “bullish phase.
Coin Days Destroyed indicator
An analysis method is used to determine whether long-term Bitcoin holders are currently offloading their assets. The Coin Aging Destruction Tracker monitors Bitcoins that have remained inactive for extended periods, and it confirms if those coins are being disposed of.
If the reading on the indicator exceeds 15-20 million units, as per CryptoQuant’s analysis, it might suggest a temporary downtrend in the value of Bitcoin. At present, the indicator stands at 15.1 million.
Inter-Exchange Flow Pulse
The final indicator is the Inter-Exchange Flow Pulse (IFP) which monitors the movement of Bitcoin to and from derivates exchanges.
According to CryptoQuant, the Inflow Percentage Full (IFP) remains indicative of a positive trend, as investors continue transferring Bitcoin to derivative platforms for use as security.
At the moment, Bitcoin’s Incremental Fill Price (IFP) is approximately 730,000 and it’s on an upward trajectory. In past bullish phases, this IFP has soared as high as one million, while during the bear market in late 2023, it dipped to around 200,000.
Since Donald Trump’s presidency, the value of Bitcoin has consistently reached record-breaking levels. On November 19th, it peaked at more than $94,100.
According to certain experts, such as Matthew Sigel from VanEck’s digital assets research team, Bitcoin might have significant potential for further growth, potentially reaching around $180,000 by the end of next year.
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2024-11-20 09:18