bitcoin prices remain firm when writing and trading around multi-month highs but below the important settlement line around $72,000. While it is up about 20% from the May 2024 lows, some analysts are already questioning the sustainability of the uptrend, especially considering the level of commitment.
bitcoin Struggles to Gain Momentum: Will Bulls or Bears Take Over?
An analyst at x x.com/OnChainCollege/status/1794734768896270357″ target=”_blank” rel=”noopener nofollow”>points analyzes the state of bitcoin price action and believes that the current uptrend could be one of the weakest in the currency's history. This preview is especially true when comparing current performance to those seen in 2021 and 2017 using the market value to realized value ratio (MVRV).
In on-chain analysis, bitcoin's MVRV ratio compares the market capitalization of bitcoin to the total realized capitalization of all btc in circulation. The MVRV ratio also changes, fluctuating mainly affected by price action. If we look at bitcoin price action over the years, extreme highs in the MVRV ratio have often coincided with market highs.
When this happens, it suggests that btc investors who purchase the coin could be overpaying. As things currently stand, the analyst said current MVRV levels are “clear” compared to previous bull cycles, implying this rally could be tepid.
The analyst highlighted two possible outcomes for bitcoin prices. In one scenario, the current uptrend could fade, signaling the end of the rally.
If this is the case, btc prices are likely to plummet in the near future, making the rise to $73,800 the weakest bull run in bitcoin's 15-year history. based on MVRV data.
However, the current subdued price trend and pullback from an all-time high to spot rates could be a precursor to further gains in the coming months.
However, for btc bulls to take control, traders must show commitment and a change in sentiment. These two factors will work together to push prices to new all-time highs above March 2024 levels.
Case for btc Bulls: Spot ETFs and FASB Rule Changes
Most analysts believe that btc is trading at a discount to spot exchange rates. Several fundamental factors may support this perspective. For example, the resurgence in demand for spot bitcoin exchange-traded funds (ETFs) may help boost prices as it did in the best half of the first quarter of 2024.
Additionally, the planned change in Financial Accounting Standards Board (FASB) standards by the end of the year could profoundly impact bitcoin adoption. These changes would allow institutions to include btc on their balance sheets, which many believe would accelerate institutional adoption of bitcoin and drive prices even further.
Featured image from Canva, TradingView chart
