Bitcoin haters are ready to read BTC’s obituary, but on-chain data and other indicators suggest the current price range could be a good buy zone.
Like clockwork, the start of a crypto bear market has brought to light the “Bitcoin is dead” crowd gleefully proclaiming the end of the largest cryptocurrency by market cap.
Peter Schiff, Chief Economist & Global Strategist, on a Twit dated June 14, stated that, “If #Bitcoin can collapse by 70% from USD 69,000 to under USD 21,000, it can just as easily fall another 70% down to USD 6,000. Given the excessive leverage in #crypto, imagine the forced sales that would take place during a sell-off of this magnitude. USD 3,000 is a more likely price target.”
Indeed, the past few months have been painful for investors with BTC price falling to a new 2022 low of $20,100, but new calls for the asset’s demise are likely to suffer the same fate as the previous 452 predictions proclaiming its death.
Determined Bitcoiners have a bag full of tricks and on-chain metrics they use to determine when BTC is in a buy zone and now is the time to take a closer look at them. Next, we summarize what time-tested metrics say about Bitcoin’s current price action and whether the 2021 bull market was BTC’s last gasp.
Some Traders Always Buy Rebounds from the 200-Week Moving Average
One metric that has historically served as a solid level of support for Bitcoin is its 200-week moving average (MA), as market analyst Rekt Capital points out.
According to said analysis, the lows established in previous bear markets have occurred in areas close to the 200 moving average, which has effectively behaved as an important support level.
Most of the time, the price of BTC has had a tendency to briefly go below this metric and then slowly climb back above the 200-MA to start a new uptrend.
BTC price is currently trading right at its 200-week MA after briefly dipping below the metric during the early morning selloff on June 14. While this could be a move to the downside, history suggests that the price will not fall too far below this level for any extended period of time.
Multi-Year Price Supports Should Hold
Along with the support provided by the 200-week MA, there are also several notable price levels from Bitcoin’s past that should now function as support should the price continue to fall.
The last time BTC price traded below $24,000 was in December 2020, when $21,900 acted as a support level from which Bitcoin bounced before hitting $41,000.
If the $20,000 support fails to hold, the next support levels lie near $19,900 and $16,500.
MVRV Indicates It’s Time to Start Accumulating
A final metric that suggests BTC may be nearing optimal accumulation is the market value to realized value (MVRV) ratio, which currently stands at 0.969.
Most of the time over the last four years, Bitcoin’s MVRV score has remained above a value of 1, except for two brief periods that coincided with bearish market conditions.
The brief crash that took place in March 2020 saw the MVRV score hit a low of 0.85 and stay below 1.0 for a period of about seven days, while the 2018-2019 bear market saw the metric hit a low of 0.6992 and spent a total of 133 days below a value of 1.0.
While the data does not rule out that BTC could see a further price decline, it suggests that the worst of the pullback has already occurred and the current extreme lows are unlikely to persist in the long term.
By Audy Castaneda
