Despite some midweek turbulence, bitcoin (btc) price rose sharplylost last week on a positive note, with an overall price gain of 4.07% according to data from CoinMarketCap. This positive price performance allowed btc to maintain its upward trajectory from the previous week, when it surpassed the $60,000 price mark. However, amidst these price gains, it remains highly uncertain whether the cryptocurrency market leader has now entered an uptrend.
Related Reading: bitcoin Bull Run Begins: Expert Points to Massive Upside Potential in Coming Months
bitcoin MVRV movement key to bullish rally, says analyst
On Friday, popular cryptocurrency analyst Ali Martinezx.com/ali_charts/status/1837152066721960416″ target=”_blank” rel=”noopener nofollow”> shared A market condition that would signal btc's return to a bullish phase. Over the past two weeks, the leading cryptocurrency has gained more than 23%, moving from around $52,800 to a peak price of $64,041.
However, Martinez posits that bitcoin’s market cap to realized value (MVRV) ratio must close above its 90-day moving average to determine an uptrend following weeks of sideways movement in July and August. Generally, the MVRV ratio is used to assess the bitcoin market trend: a high ratio indicates a possible overvaluation of the asset, and a low ratio indicates an undervaluation.
When bitcoin's MVRV crosses below its 90-day moving average, i.e. the average MVRV over this period, it indicates that the asset is in a correction or bearish phase and investors are likely holding unrealized losses, which could soon lead to negative sentiment. Conversely, when MVRV moves above its 90-day moving average, it indicates bullish momentum as bitcoin’s market value rises above historical averages.
Ali Martinez has posited that the latter condition must occur to halt bitcoin's bullish transition despite recent market gains. If this scenario plays out, btc could rally as high as $68,000-$70,000, where its next significant resistance level lies. In that case, the leading cryptocurrency could likely post an overall positive performance in the coming months. bitcoin/bitcoin-set-for-further-losses-as-data-points-to-stormy-september-details/” target=”_blank” rel=”noopener nofollow”>Septembera month known for its bearish returns.
New $2B btc futures contract raises risk of potential long squeeze
In other news, bitcoin traders have opened approximately $2 billion worth of futures contracts in the past 48 hours following the asset's recent price surge. While this development signifies a significant market interest in bitcoin, it also represents a significant increase in leveraged positions. Ali Martinez x.com/ali_charts/status/1837096111611219978″ target=”_blank” rel=”noopener nofollow”>States that this situation presents a risk of long-term compression, i.e. if the price of btc falls, the positions of these traders may be forcibly liquidated, which would cause downward pressure on the price of bitcoin.
At the time of writing, btc is still trading at $62,875 with a loss of 1.59% over the past day. Meanwhile, the asset’s daily trading volume is down 16.75% and is valued at $36.4 billion.
Featured image from The Motley Fool, chart from Tradingview
