{"id":107875,"date":"2021-01-08T19:06:18","date_gmt":"2021-01-08T19:06:18","guid":{"rendered":"https:\/\/precoinnews.com\/?p=107875"},"modified":"2021-01-08T19:06:18","modified_gmt":"2021-01-08T19:06:18","slug":"bitcoin-indicator-that-signaled-10x-rally-in-2017-flashes-again","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/bitcoin\/bitcoin-indicator-that-signaled-10x-rally-in-2017-flashes-again\/","title":{"rendered":"Bitcoin Indicator That Signaled 10x Rally in 2017 Flashes Again"},"content":{"rendered":"
A Bitcoin trend indicator whose last appearance in 2017 had sent the prices 10 times higher appeared again this Wednesday morning.<\/p>\n
Dubbed as “Bitcoin MVRV Z-Score,” the indicator is nothing but a ratio of the difference between the cryptocurrency’s actual and realized market capitalization. Glassnode, the blockchain analysis platform that created the said metric, sees the score below zero as a sign of an undervalued Bitcoin. Meanwhile, anything above 7 indicates a market top\u2014an overbought Bitcoin.<\/p>\n
\n“The MVRV Z-Score is used to assess when Bitcoin is over\/undervalued relative to its fair value,” Glassnode explained. “When market value is significantly higher than the realized value, it has historically indicated a market top (red zone), while the opposite has indicated market bottoms (green zone).”<\/p>\n<\/blockquote>\n
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Bitcoin reached ‘5’ on Wednesday for the first time since December 2017. Glassnode stated that a similar upside move in June 2017 had led to a 1,000 percent price rally, hinting BTC\/USD could repeat the same scenario in the future.<\/p>\n
Twin Sentiments<\/h2>\n
The fractal surfaced in the wake of a relentless Bitcoin bull run that took its prices from as low as $3,858 in March 2020 to as high as $35,868 this Wednesday. Traders and investors poured massive capital into the cryptocurrency’s market, believing a narrative that projects it as a hedge against inflation\u2014like gold.<\/p>\n
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In December, the Federal Reserve Chairman reiterated that they want to take the inflation rate above 2 percent in the coming years. The US central bank committed to purchasing corporate and government debts indefinitely while maintaining benchmark lending rates between zero and 0.25 percent.<\/p>\n
The prospects of earning lower yields in the bond and currency markets sent investors to more volatile safe-haven alternatives.<\/p>\n
Bitcoin and Gold benefited from capital migration owing to their scarcity against unlimited fiat supply. Nevertheless, analysts noted that Bitcoin would eventually overtake gold\u2014a $9-12 trillion market\u2014as the best safe-haven amid an economic crisis.<\/p>\n
\n“A crowding out of gold as an \u2018alternative\u2019 currency implies big upside for Bitcoin over the long term,” said JPMorgan strategists in their latest note to investors.<\/p>\n<\/blockquote>\n
“A convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process,” they added as a caution, implying the cryptocurrency could still hit at least $146,000 in the long-term, if not in 2021.<\/p>\n
Bitcoin Overbought, Technically<\/h2>\n
The long-term timeframe charts\u2014the daily and weekly\u2014reflect Bitcoin as an overbought asset. The cryptocurrency’s Relative Strength Indicator is extremely higher above ’70,’ which increases its possibility of either undergoing a deeper downside correction or an overextended sideways consolidation. The RSI neutralizes itself below 70 on such price moves.<\/p>\n
Many analysts, including Josh Rager, sees the price correcting by 30-50 percent before it resumes its uptrend to more record high.<\/p>\n