According to crypto analysts, the market could still have a long way before hitting bottoms and recovering. Woonomic, an onchain analyst, recently took to Twitter analyzing the state of Bitcoin.
Bitcoin’s MVRV ratio is deep in the buying zone
In a thread, he released a thread indicating Bitcoin’s MVRV ratio a few days before and after the FTX debacle. The avid trader shared his views regarding Bitcoin’s MRV ratio. He begins by saying;
The MVRV ratio of an asset is the ratio between the asset’s current market capitalization and realized capitalization. Realized capitalization is the value of the tokens remaining at their purchase value, not sale value.
According to the analyst, before the FTX debacle, the bitcoin price was near bottom. However, soon after, the FTX debacle sent the entire bitcoin charts back into the buy zone. In the value zone, the assets trade at 1 to 1.5 times the book value. Hence, it’s the best opportunity to buy.
Once the markets surpass the buy zone, they will form a bottom, and a reversal trend will begin. However, in this case, Bitcoin‘s prices are in the value zone, meaning the prices could have to drop even further before bottoming.
More pain to come before bottoms
Another analyst believes that the next destination for Bitcoin before forming bottoms is about $12k. Another analyst and trader cryptocapo tweeted a few days ago;
“Htf: lower lows and lower highs after breaking a monthly redistribution range. Below June’s low and at supply zone. Ltf: weak trend caused by a short squeeze (bull trap). Volume dying. 12000-14000 remains the main target for a local bottom formation.”
Historically Bitcoin makes the bottom when the supply in profit is just about 40%, and supply in loss ranges between 58% and 61%. Once that reaches, then BTC will make a bottom.
However, investors must remember that many Bitcoins are locked in GBTC trust. According to analysts, if the coins are unlocked, the target lows would be sub-$10. So, based on the two analysts above, Bitcoin’s bottom is close, but there will be more pain before that.
Bitcoin’s recent price action
Bitcoin is trading at $16,488 today and has gained over 1.7% in the past 24 hours. A few days ago, bitcoin had dropped to sub-$16k, trading at $15.7k. While the coin is currently bullish, these will likely be short-lived. Since analysis indicates that Bitcoin has not reached its bottom, investors should expect further adverse price action in the next few weeks or months.