Bitcoin (BTC) prices fell by more than 8% last week alone, resulting in increased bearish sentiment across the market. The downward trend, as seen in the broader crypto market, has been largely attributed to massive institutional restocking, precious metals inflows, and the Federal Reserve’s latest decision to leave interest rates unchanged.
To illustrate how cautious Bitcoin investors are, data from Coincodex shows that the Fear and Greed Index is at 16, indicating that the market is ravaged by extreme fear. However, recent on-chain analysis suggests that Bitcoin may be reaching a turning point.
Catch! Bitcoin market winter is almost over – analyst
According to market analysts Michael van de Poppe and James Easton, the Bitcoin MVRV Z-score is pointing to a possible end to the bearish market phase seen over the past four months. Notably, after touching the $126,000 price level in early October, BTC has experienced significant selling pressure, resulting in the price retesting the $80,000 area twice.
For reference, MVRV measures the current market value of Bitcoin at the average price (real value) at which all coins were last transferred. When combined with the Z-score, it analyzes how far the market price deviates from the true value, expressed in standard deviations. The MVRV Z-Score helps identify whether Bitcoin is overvalued or undervalued; Thus, it can be used to highlight potential market bottoms or tops.
Based on analysis presented by James Easton, Bitcoin’s current Z-score is lower than those recorded during bear markets in 2015, 2018, 2020, and 2022, indicating that the digital asset is trading at deeper levels of undervaluation absent in previous market cycles. Although the decline from the current all-time high has been relatively small compared to previous cycles, Van de Poppe points out that the MVRV Z-Score data indicates that the bear market has reached its latter stages, with a potential end now in sight.
This estimate suggests that BTC could soon generate a significant rally with possible immediate targets of $90,000 and $97,500.
More reasons to be bullish – Van de Poppe
In a separate X post, Michael Van de Poppe shared other developments that point to an imminent Bitcoin recovery. One of these was the last time the RSI on the BTC/Gold chart fell below 30, which marked the end of the previous Bitcoin market. Furthermore, the gold market appears to have topped out after reaching a new all-time high of $5,600 on January 30. The veteran analyst also pointed out that the last time such a development happened with the precious metal was a crypto mega rally.
At press time, BTC is valued at $83,645, as its daily trading volume surges to approximately $72.31 billion.
Featured image from iStock, chart from TradingView
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