Following an impressive performance last week, Bitcoin started the new week on a strong note, with the largest crypto asset globally maintaining its position above the $30K threshold. In the past seven days, Bitcoin surged by over 17%, tapping a one-year high of $31,397 and making it the best performing week since mid-march.
This strength has primarily been attributed to recent bitcoin ETF applications led by BlackRock and Valkyrie, which coincided with a mini-bull market that kicked off earlier this year. This surge has also prompted speculation about the future trajectory of Bitcoin and whether it has reached its bottom.
On Sunday, Dan Lim, a verified analyst for onchain analytics firm Cryptoquant, shared his thoughts on Bitcoin’s current behaviour. The pundit highlighted that the substantial surge of Bitcoin since the start of 2023 has propelled the MVRV indicator, which gauges the present value of Bitcoin, to reach 1.51, surpassing the undervaluation range of 1.0. According to him, this suggests a potential shift in the market dynamics for Bitcoin’s future direction.
“In the past, when MVRV broke strongly above 1.0 at the bottom of a bear market and continued to rise for several months, there was no case where Bitcoin bottomed out again,” said Lim.
Lim further highlighted the rise in Bitcoin dominance and the overall market, which often occurs at the beginning of a bull market. Based on these observations, Lim believed there might be only a limited time remaining in 2023 or the beginning of 2024 to make stable investments in Bitcoin and Ethereum.
He further acknowledged concerns about a potential recession and uncertainties surrounding Fed policies. However, contrary to many’s belief that Bitcoin could slump in the face of a recession, Lim provided a different perspective. He suggested that the current moment could present an opportune time to consider buying Bitcoin, noting that once the market uncertainties are resolved, it might as well mark the end of the ongoing bull run, opening a window for a potential sell-off.
Lim’s insights remain significant, especially in light of other key Bitcoin indicators turning green, which further supports the notion of an imminent bull run. On Monday, Glassnode reported that following the aftermath of the COVID-19 crisis, there has been a consistent decline in the percentage of Bitcoin held within Exchange addresses. This figure has reached a current value of 11.7%, equivalent to 2.27 million BTC.
Importantly, this marks the lowest recorded level since December 21, 2017. The decline in Bitcoin holdings on exchanges indicates a potential decrease in selling pressure and a shift towards long-term investment strategies, which have historically been good for the price.
At press time, Bitcoin was trading at $30,322 after a 0.17% drop in the past 24 hours.