Thurday Newsletter

Explore the latest trends, gain valuable insights, and stay informed in the dynamic cryptocurrency ecosystem.

25 April 2024

A crypto analyst has noted that Bitcoin Chain Metrics has just experienced one of the “healthiest market resets” he has witnessed in a long time.

Bitcoin, which is currently priced at $63,996, may be entering a favorable buying zone according to two key metrics used by crypto analysts to monitor on-chain trading activity.

The market value to realized value (MVRV) and open interest (OI) weighted funding rate metrics suggest Bitcoin is presenting an attractive entry point for traders.

“This is the optimal moment to invest in Bitcoin,” stated the anonymous trader Mister Crypto to his 94,100 followers on X on April 23.

Bitcoin’s OI weighted funding rate—indicating the cost of holding Bitcoin futures positions—has just moved into positive territory on April 24 after spending 24 hours in the negative zone, registering 0.0093% as per CoinGlass data.

Despite this upswing, it remains significantly lower than the 0.0714% seen at the beginning of April, a shift analysts consider positive for the market.

“It’s one of the healthiest market resets I’ve seen in a while,” on-chain analyst Checkmate noted in an April 24 post.

“Rates holding steady. Bitcoin is set for takeoff,” added Crypto Banter host Kyle Doops in a post on April 24.

The rise in funding rates signals growing interest in long trades, indicating a more bullish market sentiment.

The last significant peak in Bitcoin’s OI weighted funding rate was in early March, coinciding with Bitcoin’s all-time high of $69,200 that day.

Just a week later, on March 14, Bitcoin surpassed that record, reaching $73,835 according to CoinMarketCap data.

However, Charles Edwards, founder of the Capriole Investments fund, told Cointelegraph that while funding rates remain a good general indicator, they lack the same certainty as in previous years.

“Between 2018 and 2021, the metric had a nearly 100% success rate when it turned negative, indicating a strong potential for profit on long trades,” he said.

But Edwards notes that the increased complexity of the market today, with more participants involved, makes the metric less straightforward.

Meanwhile, the MVRV indicator, which assesses whether Bitcoin is over or undervalued relative to its fair value, suggests Bitcoin is moving further into favorable buying conditions.

At the time of writing, Bitcoin’s MVRV score stands at 2.32, down 6.45% since the start of April, according to LookIntoBitcoin data.

An MVRV score above 3.5 suggests the market is nearing its peak, while a score below 1 indicates the market has bottomed out.

Edwards noted that the current MVRV levels suggest “considerable potential over the next year.”

However, he cautioned that the current buying opportunity is less advantageous than the deep value opportunities available two years ago.

“It’s not as attractive as it was a year or two ago when the metric was much lower,” he said. “But it’s also not indicating overvaluation, which would be indicated by a score of four, five, or six.”