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How low can Bitcoin worth go? – Cryptospacey

Cryptospacey

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Flagship digital asset Bitcoin (BTC) has had a rough year, falling 72 percent from its all-time highs and shedding more than 50 percent of its value this year alone.

In several events, the value of the property has fallen below the $20,000 mark. During the bear run, BTC fell below the previous cycle’s all-time high of $19,750, primarily in its historical past.

These situations have led to probably the most common questions in the market “how low can BTC go?”

First of all, there is no positive strategy to deal with this, as the risk appetite of the crypto market can be very unpredictable – one only has to look at how the value of Ethereum (ETH) played out after the highly anticipated merger to get an idea of ​​that. how unpredictable the market is.

Nevertheless, certain metrics such as the MVRV Z-Rating can be used to determine the efficiency of an asset’s value.

The MVRV Z-Rating is based on three metrics – market value (MV), realized value (RV) and Z-score. The realized rating is the value of each Bitcoin as it was transferred in the wallets, while the Z-score is the deviation between the market value and the realized value.

So, MVRV Z-Rating is presented as the ratio of market cap to realized cap and the standard deviation of all historical market cap data, i.e. (market cap – realized cap) / std (market cap).

In most cases, the MVRV Z-Rating can be used to determine whether Bitcoin is overvalued or undervalued. Traditionally, when the market cap has increased significantly over the realized value, it means the top of the market (the purple zone), while the other means the back of the market (the inexperienced zone). The MVRV Z-Rating reveals that BTC is undervalued as the realized value has barely increased compared to the market value.

Kryptoslate Research Bitcoin MVRV Z-Score
Delivery: Glassnode

The rating is currently in unseasoned territory, indicating the backside of the market, and has been there since Terra LUNA collapsed.

On September 21st, the Z-score was -0.14, which clearly shows that the market value is less than the realized value. The MVRV was currently 0.87.

Unlike the previous bear markets in 2020, 2019, 2014 and 2011, the market was in this zone between 20 days and 300 days, suggesting that BTC’s value may remain in this zone for an additional six months.

Meanwhile, the truth that MV reveals that we’ve reached the bottom doesn’t mean that BTC can’t still go down. Nevertheless, a break below $17,500 – the next level of resistance – suggests that this is not a daily bear market.

Former BitMEX CEO Arthur Hayes certainly pointed this out in one of his essays. According to him, traders who are long in Bitcoin should be wary of $17,500.

Hayes went on to say that much of Bitcoin’s value is dependent on the liquidity of the US Greenback, which has been tightened since November 2021. With the central bank looking to remove more liquidity, a hawkish stance may look at Bitcoin’s sustainability in this sign.

Posted in: Bitcoin, Analysis

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