Despite some mid-week turmoil, Bitcoin (BTC) price surged to a new record high.The cryptocurrency lost positively last week, with a total price gain of 4.07% according to data from CoinMarketCap. This positive price performance allowed Bitcoin to maintain its upward trajectory from the previous week when it crossed the $60,000 level. However, amid these price gains, it is still widely uncertain whether the leading cryptocurrency has now entered an uptrend.
Related Reading: Bitcoin’s Rally Begins: Experts Point to Huge Upside Potential in Coming Months
Analysts say Bitcoin MVRV movement is key to rally
On Friday, popular cryptocurrency analyst Ali Martinez said, subscriber The market condition that would indicate that Bitcoin is back in the 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 assumes that Bitcoin’s market cap to realized value (MVRV) ratio needs to close above its 90-day moving average to mark an uptrend after weeks of sideways movement in July and August. In general, the MVRV ratio is used to assess the direction of the Bitcoin market, with a high ratio indicating potential overvaluation of the asset while a low ratio indicates undervaluation.
When Bitcoin’s MVRV crosses its 90-day moving average (i.e. the average MVRV over that period), it indicates that the asset is in a corrective or bearish phase with investors likely to carry unrealized losses, which could soon generate negative sentiment. Conversely, when MVRV moves above its 90-day moving average, it indicates bullish momentum as Bitcoin’s market cap rises above historical averages.
Ali Martinez hypothesizes that the last condition must occur to end the bullish move in Bitcoin despite the recent gains the market has made. If this scenario happens, Bitcoin could rally to $68,000 to $70,000, where the next important resistance level is located. In this case, the leading cryptocurrency is likely to post a generally positive performance in SeptemberA month known for its bearish returns.
New $2B Bitcoin Futures Contract Could Lead to Long-Term Pressure
In other news, Bitcoin traders have opened $2 billion worth of futures contracts in the past 48 hours following the recent surge in the asset’s price. While this development indicates significant market interest in Bitcoin, it also represents a significant increase in leveraged positions. Ali Martinez Countries This situation poses the risk of a long squeeze, i.e. if the price of BTC falls, the positions of these traders may be forcibly liquidated, putting downward pressure on the price of Bitcoin.
At the time of writing, Bitcoin is still trading at $62,875, down 1.59% over the past day. Meanwhile, the asset’s daily trading volume has dropped by 16.75% to $36.4 billion.
Featured image from The Motley Fool, chart from Tradingview