• On-chain metrics suggest that Bitcoin may have reached its market bottom.
• The Supply in Profit and Supply in Loss lines have converged and diverged, indicating a potential macro upturn in price.
• The Market Value to Realized Value ratio is also split by long-term and short-term holders, and is currently indicating that the Bitcoin price is trading below “fair value”.
Recent on-chain research has suggested that Bitcoin may have reached its market bottom. Analysis of various metrics, such as Supply in Profit (SP) and Supply in Loss (SL) lines and the Market Value to Realized Value (MVRV) ratio, shows that the Bitcoin market is likely at the beginning of an upturn.
The SP and SL lines are indicators that show the circulating supply that is either in profit or loss, based on the price of the token being higher or lower than the current price at the time of last moving. Market cycle bottoms coincide with the SP and SL lines converging, which happened most recently around Q4 2022. Subsequently, the lines diverging corresponds with a potential reversal in price. This pattern has held true in the past, and currently, the SP band has moved up sharply to diverge from the SL band, indicating that an upturn in price could be in the works.
Another on-chain indicator is the MVRV ratio. This ratio measures the difference between the market cap (or market value) and realized cap (or the value stored). By collating this information, MVRV indicates when the Bitcoin price is trading above or below “fair value”. It is further split by long-term and short-term holders, and currently, the MVRV is indicating that the Bitcoin price is trading below “fair value”.
Overall, various on-chain metrics continue to suggest that the Bitcoin market may have reached its bottom. While it remains to be seen if the current cycle plays out the same as past cycles, the analysis of these indicators provides some insight into the current market and could be an indication of a potential macro upturn in price.