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CryptoQuant, a cryptocurrency analysis platform, stated that Bitcoin is approaching a critical level on its MVRV Z-Score indicator, but the current picture does not yet confirm the start of a new bull market. According to the analysis, the MVRV Z-Score is approaching its 365-day moving average, which has stood out as a significant regime change level in past market cycles.
CryptoQuant added that in the past, a sustained breakout above the 365-day moving average on the MVRV Z-Score signaled a market transition from a recovery phase to an expansion phase. It was noted that the breakout in 2015-2016 preceded the 2017 bull market, the 2020 move preceded the 2020-2021 rise, and the 2023 recovery coincided with the final expansion period.
Bitcoin’s MVRV Z-Score Remains Below Average
However, the indicator is still below the 365-day moving average. According to CryptoQuant, if Bitcoin breaks above this level and maintains its position, it could indicate a resurgence of unrealized profits across the network and the start of a new expansion regime. A rejection from this level, on the other hand, could mean that overall market profitability is not yet strong enough to support a broader bull run.
The analysis also highlighted a key point that distinguishes the current market cycle from previous lows. In past major cycle lows, the MVRV Z-Score fell below zero, reaching a low valuation zone. This did not happen in the recent pullback. CryptoQuant noted that this could mean Bitcoin is experiencing a structurally shallower correction, or that a capitulation on the scale seen in previous macro lows may not yet be complete.
On the other hand, it was noted that the MVRV Z-Score formed lower peaks in each cycle. According to CryptoQuant, this trend indicates that even if the <a href="https://xpertsstudio.com/bitcoin-price-frozen-near-79000-as-oil-and-war-risk-rewrite-the-macro-playbook/" title="Bitcoin Price Frozen Near $79,000 as Oil and War Risk Rewrite the Macro Playbook”>Bitcoin price continues to reach higher peaks, the excesses experienced by the market in terms of valuation are becoming more limited over time.
CryptoQuant’s risk assessment states that for a bullish scenario, the MVRV Z-Score needs to regain and remain above the 365-day moving average. A rejection from this level would indicate the market remains in a “repair” regime, while a return of the indicator towards zero could reinforce the view that the current correction process is not yet complete.
*This is not investment advice.
Source: cryptonews.net