Amid Bitcoin’s recent price recovery after the U.S. Fed rate cut, key market data signals further bullish momentum.
- Bitcoin surged above $64,000 following the U.S. Fed rate cut but fell to $63,786 at press time. Bitcoin’s MVRV ratio signaled undervaluation, with further upward momentum needed for a sustained rally.
Ever since the United States announced its latest interest rate cut, Bitcoin [BTC] experienced a gradual rebound in price.
The cryptocurrency surged to a peak of over $64,000 on the 23rd of September, gaining 8.5% in value over the last week.
However, following this surge, Bitcoin retraced slightly to $63,786 at press time—still up 0.2% in the past 24 hours.
The asset’s recent performance has captured the attention of analysts, especially given its resistance and support levels, which seem to suggest an upcoming shift in momentum.
One such analyst, operating under the pseudonym CoinLupin on the CryptoQuant platform, pointed to Bitcoin’s Market Value to Realized Value (MVRV) ratio as a key indicator of the potential direction of the market.
The MVRV ratio compares Bitcoin’s market value to its realized value, helping traders understand whether the asset is overvalued or undervalued at a given point in time.
Key indicator for Bitcoin’s trend
In a recent analysis, CoinLupin explained that Bitcoin’s 1-year and 4-year MVRV averages have historically served as critical resistance or support levels during various market trends.
According to the analyst,
“The overall market flow tends to follow a similar pattern.”
CoinLupin highlighted that the MVRV ratio, particularly during the recovery phases in 2023, provided valuable insight into Bitcoin’s price fluctuations.
Source: CryptoQuant
The current market scenario reveals a deviation from past trends.
After a brief period of “overheating” during the recent recovery, the price correction for Bitcoin was milder than expected, and the consolidation period has lasted longer than anticipated.
This extended period of consolidation has caused Bitcoin’s MVRV ratio to dip below both its 1-year and 4-year averages.
While this could be a signal of the market being undervalued, the analyst suggested that for Bitcoin to regain strong bullish momentum, the MVRV ratio must rise above its 1-year average.
This could trigger a new bullish phase, leading to potential gains in the coming weeks.
Open Interest and Active Addresses
Beyond the MVRV ratio, other key metrics are also worth examining to determine Bitcoin’s future price action.
According to data from Coinglass, Bitcoin’s Open Interest—an indicator of the number of open Futures contracts on the asset—has fallen by 0.85% to a current valuation of $34.78 billion.
Source: Coinglass
This decline in Open Interest suggested that market participants may be closing positions, potentially signaling caution or uncertainty among traders.
Additionally, Bitcoin’s Open Interest volume, which tracks the total value of active contracts, has plunged by 20.86% to $45.77 billion.
A sharp decrease in Open Interest often indicates reduced participation in the market, which could dampen price movement.
On the other hand, data from Glassnode revealed a positive development in Bitcoin’s active addresses, which saw a significant recovery after a steep drop earlier this month.
Bitcoin active addresses
The number of active addresses—an indicator of network activity—has rebounded from 600,000 to 797,000 as of today.
This uptick in active addresses may indicate renewed interest in Bitcoin and could potentially signal stronger price movement ahead, especially as more participants engage with the network.
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