Market watchers in the Bitcoin investment community are currently on edge, trying to decide if they are looking at a distribution zone or a prime buying opportunity, according to CryptoQuant. Figuring out when to exit and enter a market is key, and for those who intend to hold coins for long periods of time, the MVRV (Market Value to Realized Value) indicator could be one tool that proves useful.
MVRV Indicator Below 2 Suggests Bitcoin Still in Accumulation Phase
The MVRV indicator is highly accurate at identifying price tops and bottoms for Bitcoin. When the value of this indicator falls below 2 it means that an accumulation phase is still ongoing. It suggests that the price has not yet reached its true value. Consequently, this would represent an opportune moment for investors to accumulate more BTC.
On the other hand, if MVRV goes beyond 2, it means Bitcoin is heading to a new peak. In the past, peaks have happened when the MVRV indicator hit 3.5 or more. When it gets to these levels, investors should begin thinking of scaling out gradually as this shows that they are near or at the highest level.
Bitcoin Market Far From Peaking, Expect Prices Above $100K
Currently, MVRV stands at 2.3 which means there is still much price growth potential before Bitcoin reaches its fair value. This implies that Bitcoin is still in accumulation and could grow significantly. However, if prices fall down, it gives an opportunity of buying more Bitcoins at lower costs.
As per CryptoQuant, investors should only start exiting the market when they see MVRV approaching 3 because it helps them cash in on their investments when Bitcoin is about to peak. The above analysis indicates that market may be far away from peaking so far therefore expect BTC price break $100k this cycle.
