Another key indicator of Bitcoin has changed. Should this cause our attention?

According to the Bitcoin MVRV-Z scoring indicator of Glassnode, Bitcoin is about to cross the red line . The last time I saw this trend, the price of Bitcoin more than tripled. 

What is the Bitcoin MVRV-Z score? Is it important? 

Bitcoin’s MVRV-Z score metric is usually used to measure whether an asset is undervalued or overvalued. When this indicator reaches the top of the red zone shown below, it indicates that the market may be overvalued .

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Currently, Bitcoin’s MVRV-Z score shows that it is about to enter the red zone. When it appeared in the last such up cycle, Bitcoin subsequently more than tripled. 

Researchers at Glassnode explained that “MVRV-Z scores are used to assess whether an asset is overvalued or undervalued relative to its’fair value’, highlighting the deviation between its market value and its realized value.

When the market value is significantly higher than the actual value, the indicator will indicate that the market value will reach the top of the market (shown in the red interval in the chart), and the opposite will indicate the bottom of the market (shown in the green interval). ” 

The reason for this trend is that Bitcoin demand exceeds supply during the bull market cycle. However, due to the fear of missing out (FOMO) markets, this trend usually continues after reaching the seller’s market . 

in caseBTCBefore following the market cycle, most well-known investment forecasters as encryption dominant currency , Bitcoin prices before the end of the year could reach $ 100,000.

A trader with the pseudonym “LilMoonLambo” wrote: ” Since December 2017, when Bitcoin entered the red zone for the first time, it injected twice as much capital into Bitcoin. Can we see this happen again? ” 

So what will happen next? 

In the short term, it is key for Bitcoin to stay above $54,000, and this level has become a support point. 

The price of BTC rose to $54,000 overnight, and its liquidity played a role. The trend of strong recovery shows that there is strong buyer demand in the market. 

Stablecoin’s capital inflow is increasing,CoinbaseThe premium has also been restored. The combination of these two factors shows that Bitcoin’s bull market trend is intact .

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When the premium disappeared, BTC has seen a correction in the past month. But as long as the premium remains at a high level, it indicates that US buyers are accumulating and the bull market trend may resume. 

BtC is currently in the price discovery phase, which means it will hit a record high. We believe that when its price reaches the top, USD 54,000 and USD 50,000 will be key macro support points .

The original text is from newsbtc, abridged, compiled by Blockchain Knight, English copyright belongs to the original author, please contact the compiler for Chinese reprint.

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