Market Analysis Reveals Potential Further Downside
CryptoQuant’s Head of Research Julio Moreno has issued a stark warning about Bitcoin’s current market position, suggesting that calling a bottom may be premature based on critical on-chain metrics. This analysis comes as Bitcoin continues to show weakness after breaking below key support levels.
MVRV Z-Score: A Critical Indicator
The Market Value to Realized Value (MVRV) Z-Score, a key valuation metric, has recently plunged below its 365-day moving average, triggering concerns among analysts. This technical indicator has historically proven reliable in identifying market cycle phases.
Key MVRV Z-Score Insights:
- Current reading remains above zero, indicating overall market profitability
- Breaking below 365-day MA historically signals extended downturns
- All valuation metrics show correction territory status
Market Implications
With Bitcoin currently trading around $86,300, down 11% over the past week, the MVRV analysis suggests potential further correction before a true bottom forms. Historical patterns indicate that breaks below the 365-day moving average often precede extended periods of price weakness.
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Expert Analysis
According to Moreno, ‘All valuation metrics are in correction territory,’ suggesting that investors should exercise caution before assuming the bottom is in. The analysis indicates that while the market remains above the critical zero threshold, the breakdown below the 365-day MA could signal an extended period of price discovery.
Looking Ahead
While the current market structure suggests further downside potential, investors should monitor the MVRV Z-Score’s relationship with its moving average for potential reversal signals. Historical data suggests that patience may be required before a definitive bottom formation occurs.
Source: NewsBTC