These Metrics Suggest It’s Time to Buy Bitcoin Amid BTC Price Drop – Bitfinex

Analysts at crypto exchange Bitfinex say several on-chain metrics are showing a buy signal for bitcoin (BTC), indicating a potentially attractive entry point for market participants.

According to the latest Bitfinex Alpha report, the measure of market value to realized value (MVRV) and the funding rate weighted by open interest (OI), which shows the cost of holding bitcoin futures positions, indicate a buying opportunity advantageous for BTC investors.

An attractive entry point for BTC investors

The MVRV indicator, which plays a crucial role in determining whether BTC is overvalued or undervalued compared to its fair value, has been declining since early April. A score above 3.5 indicates that the Bitcoin market is near its peak, while a score below one indicates a bottom. As of April 26, the MVRV ratio had fallen 10.5% from its monthly high to 2.21, suggesting that BTC may be currently undervalued.

Also, an MVRV ratio below its 90-day average, currently at 2.44, is often followed by significant returns. This corroborates Bitfinex’s claims that the current trading climate can be a lucrative opportunity for Bitcoin investments.

On the other hand, the OI-weighted funding rate saw a positive shift on April 24, following a decline into negative territory the previous week. The metric fell to -0.0071% on April 14. Bitfinex said the shift from a negative to positive funding rate indicates increased interest in long Bitcoin positions and a shift in market sentiment from bearish to bullish.

This also means that traders are increasingly willing to pay more to hold positions that bet on BTC’s rise in value.

Bitcoin dominance declines

It is worth noting that a low MVRV ratio and a high OI-weighted funding rate do not guarantee that Bitcoin’s current local low of $59,675 will hold before the cryptocurrency reaches a new all-time high. However, these metrics have historically matched a BTC bottom, suggesting that the asset cannot fall below this level.

In addition to bullish signals on the chain, Bitcoin’s dominance has waned as attention shifts to altcoins, which are outperforming the leading digital asset. Analysts said the shift comes because Bitcoin’s reduced supply growth is seen as a long-term bullish development, increasing investors’ risk appetite and leading them to seek higher returns from alternative assets.

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