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It’s been another strong week for BTC, up +10.46% over the past 7 days.
Figure 1: BTC steadily climbing higher.
There has been a steady persistent bid on the asset that has seen it sail past the psychological number of $100,000 once again.
It has quickly reached the area of resistance we have been discussing in this newsletter in recent weeks. It may need some time to break through and we note that there has been a brief pause over the weekend.
However, we do expect BTC to break through and make new all-time-highs in the near future.
Figure 2: BTC now up at range resistance.
Both April and so far May are looking to be strong months for Bitcoin this year. BTC is up 11% so far this month and closed out April +14.21%.
Figure 3: BTC monthly returns heatmap.
The Big Story: BTC Just Getting Started?
As BTC breaks back above $100k, we take a quick look at some key long term metrics and share our point of view on the potential for BTC over the coming months.
MVRV Z-Score
A critical chart for identifying the extent to which the market is becoming overheated.
The Bitcoin MVRV Z-Score chart measures how far the market value (price) of Bitcoin is from its realized value (average price at which coins last moved), standardized by historical volatility.
It highlights when Bitcoin is significantly overvalued (when the orange z-score approaches the red zone) or undervalued (when it approaches the green zone) compared to its historical norm.
It is therefore extremely helpful to identify when BTC is approaching potential market tops and bottoms based on extreme deviations from market norms.
Figure 4: MVRV Z-Score
It currently has a z-score score of just 2.55. In all of Bitcoin’s previous cycles the z-score climbed up to at least +7. This indicates that there is still a long way to go this cycle.
Bitcoin Cycle Master
Bitcoin Cycle Master is a combination of on-chain metrics including Coin Value Days Destroyed and Terminal Price.
It is able to identify where Bitcoin price is valued relatively within its market cycles by using actual network behaviour analysis. It then presents it in an easy-to-understand visual way.
It does this by creating a band of value lines on the chart below:
- Green: Cycle Lows
- Blue: Undervalued
- Purple: Fair Market Value
- Yellow: Aggressively Valued
- Red: Over Valued
Figure 5: Bitcoin Cycle Master.
Currently BTC is sandwiched between the Fair Market Value (purple) and Aggressively Valued (orange) lines. Each previous cycle, BTC has gone on to exceed the red Over-Valued line.
There is no guarantee that will happen again this cycle but the Over-Valued line is currently at $214,000 and climbing higher.
Global Liquidity (M2)
The Global (M2) Liquidity chart shows the change in global money supply from major central banks, alongside the price of $BTC.
Historically, Bitcoin bull markets have coincided with the accelerated expansion of global liquidity. More money in the global system can encourage spending on perceived ‘risk assets', especially ‘hard assets’, such as Bitcoin.
When Global Liquidity rapidly goes up, eventually so does $BTC.
Figure 6: Global Liquidity M2
Latest data shows Global Liquidity rapidly increasing. When this has happened previously it has resulted in sharp acceleration in the price of BTC.
Given all other fundamentals also look encouraging for Bitcoin right now, let’s see if this adds further fuel to the fire for BTC.
In summary, there are many major indicators for Bitcoin right now that suggest there is significantly more upside to go for BTC this cycle!
Speak again soon
The Bitcoin Magazine Pro Team.