Two Important Bitcoin Measures Indicate a Continuous Bull Trend

Bitcoin’s Bull Market: No Bubble in Sight 

Despite Bitcoin not yet reclaiming its March all-time high, analysts believe that the bull market remains strong and steady. The analysis, conducted by CryptoQuant researcher Axel Adler, focuses on two critical metrics: the bubble vs. crush market structure and the MVRV-Z score. These indicators suggest that Bitcoin’s price action is following a stable trajectory, with no significant anomalies or sharp jumps. 

Bubble vs. Crush Market Structure 

The bubble vs. crush market structure is a metric used to determine whether Bitcoin is in a bubble phase. A bubble forms when Bitcoin’s market capitalization grows faster than its realized capitalization. This situation occurred when Bitcoin hit its all-time high of $73,679, with the bubble vs. crush score reaching around 1.5. Following this, the price dropped by 16% to $61,930 within a week. 

However, Adler highlights that the current bubble vs. crush score is at 1.02, which he considers the baseline. This low score indicates that Bitcoin is not currently experiencing a bubble. The steady growth suggests that the market is healthy, with no signs of the excessive speculation that typically characterizes a bubble. 

MVRV-Z Score: Gauging Market Valuation 

Another crucial metric is the MVRV-Z score, which stands for the ratio between the difference of market cap and realized cap, and the standard deviation of market cap. This score helps gauge whether Bitcoin is overvalued. 

Adler noted that Bitcoin’s 30-day moving average (MA) MVRV-Z score is currently at 1.8, slightly above the annual average of 1.6. This suggests only minimal overvaluation. In contrast, when the MVRV-Z score surged above 5 in March 2021, Bitcoin’s price reached $60,701 before falling 45% to $32,827 just three months later. 

The MVRV-Z score serves as a warning signal to traders. When it spikes, it often indicates that Bitcoin may be overvalued, potentially leading to a price correction. However, as long as the score remains within moderate levels, the market can be considered bullish. 

Current Market Sentiment 

As Bitcoin continues to struggle with holding the $60,000 level, traders are closely monitoring these metrics. Since July 22, Bitcoin has been trading within a 40% range, oscillating between a low of $49,842 and a high of $69,799.  

Despite this, Adler remains optimistic, stating that as long as the bubble vs. crush score and MVRV-Z score do not reach extreme levels, the market is likely to continue its upward trend. Several traders have also commented on Bitcoin’s extended consolidation phase, which often occurs before and after the halving events. 

Table: Key Bitcoin Metrics 

Looking Ahead 

Pseudonymous traders like Ash Crypto and Rekt Capital have weighed in on Bitcoin’s current phase. Ash Crypto refers to this as the “boring phase,” a period that typically occurs before and after Bitcoin’s halving events. On the other hand, Rekt Capital suggests that Bitcoin is close to reclaiming its Post-Halving ReAccumulation Range, indicating a potential upward movement in the coming months. 

In summary, the current metrics indicate a healthy and steady bull market for Bitcoin, with no signs of a bubble. The market is anticipated to maintain its positive trajectory as long as these indicators stay at modest levels. Traders should keep an eye on these metrics to gauge potential risks and opportunities in the evolving market.