Crypto analyst Benjamin Cowen, Bitcoin (BTC) $97,963.4 He stated that there is an indicator that may indicate that the bull market is preparing to end.
What is MVRV Z-Score?
Cowen explained that the MVRV Z-score measures whether Bitcoin is undervalued, overvalued, or overvalued by comparing BTC’s market cap to the value the coins last moved at.
Cowen noted that in the past, market cycle caps occurred when the MVRV Z-score reached a certain range.
“Historically, market cycle caps for Bitcoin have corresponded to an MVRV Z-score somewhere between seven and ten.”
He noted that the first cycle ceiling’s MVRV Z-score peaked at approximately 7.68, while the last one peaked at approximately 7.15.
Current Situation and Future Prospects
Stating that currently, the high level of the MVRV Z-score for this cycle is 3.29, Cowen argued that this metric could be useful in confirming the market cycle ceiling.
“I think this is another chart we can add to our toolset that will help us better navigate Bitcoin.”
At the time of writing, BTC is trading at $98,253.
In March 2024, when the market felt overheated, it was clear by looking at the MVRV Z-score that this was not really a market cycle ceiling. Such indicators can help Bitcoin investors better understand market trends.
This analysis provides an additional tool for investors to evaluate the value of Bitcoin. The indicator pointing to the upcoming peak also confirms that the top point of the bull markets has not been reached yet. Investors can determine profit taking periods by looking at the MVRV-Z score.
Disclaimer: The information contained in this article does not constitute investment advice. Investors should be aware that crypto currencies carry high volatility and therefore risk, and should carry out their transactions in line with their own research.
