On Tuesday (May 23rd), the price of Bitcoin (BTC) has been in a sideways consolidation state for a considerable period of time, as its volatility remains low. This has sparked fear among many investors as they expect BTC to continue its first quarter performance in the second quarter
On Tuesday (May 23rd), the price of Bitcoin (BTC) has been in a sideways consolidation state for a considerable period of time, as its volatility remains low. This has sparked fear among many investors as they expect BTC to continue its first quarter performance in the second quarter. However, recent analysis by CryptoQuant has pointed out many factors that suggest that price increases may be forming. So the biggest concern for investors is whether Bitcoin can ultimately break through its sideways consolidation path now?
Bitcoin "Truce" Before Bull Market Rebound
Analysts have pointed out many factors that indicate an upward trend. By observing different blockchain cycle indicators such as MVRV (ratio of market value to realized value) and SORP (ratio of short-term holders to long-term holders), it can be found that the current economic recession stage implies a recovery stage. Therefore, in the long run, it can be considered that the price of Bitcoin has a more upward trend.
MVRV is an indicator to measure the market value of Bitcoin against the actual value. If the MVRV is low, it means Bitcoin is undervalued.
There may be room for improvement. And SORP is the ratio between short-term holders and long-term holders, which can reflect market sentiment and investor behavior. If the SORP is below 1, it indicates that long-term holders hold a dominant position in the market, which is usually seen as a positive signal.
In addition, the intrinsic value of Bitcoin has also increased. According to analysis, there has been a recent trend of adjustment, but it seems to be a short-term phenomenon caused by network overheating.
Overall, based on the computing power and difficulty of Bitcoin (BTC), it indicates that Bitcoin's blockchain is actually growing. The analysis also mentioned that the price of Bitcoin is close to the BTC implementation price of 1 million to 3 million in the UTXO age band. The UTXO here refers to unused transaction outputs, and the implementation price - UTX0 age band refers to the price band determined based on the average age of Bitcoin transaction outputs in different price ranges. By observing Bitcoin prices near this price band, it can be inferred that short-term holders in the market have played a crucial supporting role in price adjustments.
It is worth noting that in the previous recovery period, the average unit price of these short-term holders became a key support line for price adjustments. This increases the possibility of price increases in the coming days.
Should the holder be excited?
In order to better understand the actual situation of Bitcoin (BTC), let's take a look at other blockchain indicators of Bitcoin to determine whether BTC is preparing for a bull market.
According to CryptoQuant's data, Bitcoin's exchange reserves are increasing, indicating that Bitcoin is facing selling pressure. Exchange reserves refer to the amount of Bitcoin stored in exchange accounts. If the exchange reserves increase, it means that more Bitcoin is stored on the exchange, which may put pressure on sellers as exchange account holders are more likely to sell Bitcoin.
In addition, Bitcoin's aSORP indicator is red, which means that more investors are selling Bitcoin on profit. The aSORP indicator reflects the profit situation of the holder. When aSORP is red, it indicates that the holder is more inclined to sell Bitcoin at a profitable price.
However, in the current situation, the active buy/sell ratio of Bitcoin (BTC) is green, indicating that buying sentiment is dominant in the market. In addition, the funding rate of Bitcoin is also good, which is an encouraging sign.
Interestingly, Bitcoin's fear and greed indices are in a neutral position. This neutral state has ambiguity as it indicates that the price of Bitcoin may develop in any direction in the short term.
Market indicators are bullish
The data from the Bitcoin Price Index Moving Average (EMA) band shows that the distance between the 20 day and 55 day EMA is narrowing, increasing the possibility of a bull market crossing.
The Chaikin Money Flow (CMF) of Bitcoin has also increased, and the MoneyFlowIndex (MFI) has also increased. The Relative strength index (RSI) is far higher than the neutral level, further increasing the possibility of price increases.
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