Analyst: Three Major Indicators Show Bitcoin Hasn't Reached Cycle Top Yet

On January 16, analysts at crypto asset manager 21Shares said that several 'on-chain' indicators suggest that Bitcoin has not yet reached its cycle peak and has room to move higher. However, the launch of the Bitcoin ETF in early 2024 and increased institutional participation in the crypto market may have also changed the behavior of some key indicators compared to previous cycles.

Analysts note that currently, Bitcoin's MVRV ratio is in the range of 2.5 to 3, signaling a possible localized high, but is still well below 7, suggesting that a major cycle top has not yet been reached. Only when the price of Bitcoin exceeds $200,000 will its MVRV ratio reach 7.

As bitcoin trades near $100,000, its net unrealized gains and losses have been in the 0.5 to 0.75 range, suggesting a potential selling opportunity. However, analysts say that only a net unrealized gain or loss of 0.75 would indicate a euphoric or greedy sentiment, suggesting that the market has topped out.

When bitcoin hit an all-time high in mid-December last year, the seller's risk ratio for long-term bitcoin holders, which measures the extent to which investors have taken profits back compared to previous market cycles, reached about 0.4 percent. Analysts on the chain tend to believe that the market enters an overheated state when the ratio approaches or exceeds 0.8%. (GOLDEN TEN)