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Bitcoin On-Chain Metrics Show BTC Price is Bottoming Out

Lilit Chichyan
By Lilit Chichyan 4 Min Read
Man looking through magnifying glass at bitcoin crypto internet currency. Trying to figure out net banking

Key Takeaways:

  • Bitcoin price saw a near-5% uptick in the previous two days.
  • Crypto analyst says the MVRV-Z score points to a bullish continuation.
  • The short-term holder loss peaked, backing the bullish scenario.
Bitcoin On-Chain Metrics Show BTC Price is Bottoming Out
Bitcoin On-Chain Metrics Show BTC Price is Bottoming Out

YEREVAN (CoinChapter.com) — Bitcoin (BTC) started the Sep. 13 Asian-Pacific session at just below $26,000, a 4.7% advance in the previous 48 hours.

Contents
Key Takeaways:Bullish Bitcoin MVRV-Z Score ReturnsBitcoin Short-Term Holder Loss Has Peaked
Bitcoin (BTC) daily price action chart. Source: TradingView.com
Bitcoin (BTC) daily price action chart. Source: TradingView.com

Nonetheless, the crypto is still down about 20% from its year-to-date high near $31,800, responding to jittery macroeconomic catalysts led by the Federal Reserve’s interest rate hikes.

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But the US central bank will likely pause its rate hikes in their next FOMC meeting on Sep. 19-20, preventing Bitcoin from closing below its prevailing support level of $25,000. Interestingly, on-chain metrics agree, with one even predicting that the BTC price will bottom out in the coming months.

Bullish Bitcoin MVRV-Z Score Returns

CryptoCon, an independent analyst with an extensive following, posted a chart on Sep. 13, underscoring the importance of the bottomed-out MVRV-Z score on the Bitcoin monthly chart.

In detail, the MVRV Z-score compares Bitcoin’s current Market Value to its ‘fair’ value. The latter is calculated using standard deviation, which pulls out the extremes in the data between Market Value and Realized Value. Practically, when the MVRV Z-score peaks, the price peaks along with the metric. A valley in the MVRV Z-score chart indicates a bearish market.

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The analyst’s graph below shows that the metric’s bottoms coincided with Bitcoin bottoms in four out of four bear market ends – in 2011, 2015, 2018, and 2022.

MVRV-Z score chart. Source: CryptoCon on X.com
MVRV-Z score chart. Source: CryptoCon on X.com

Bitcoin Short-Term Holder Loss Has Peaked

CryptoCon also noted the short-term holder loss as a “bonus” predictor of a bear market end. Short-term holders are wallets that have held their BTC for less than 155 days. According to on-chain data provider Glassnode, over 83% of short-term Bitcoin holders faced losses.

Short-Term Holder loss is finally completely maxed out, with a touch of the high loss boundary. Twice this has marked the beginning of the bear market, in 2018 and 2022. But since the bear market downtrend has ended, it’s looking much more similar to the end of the correction from the 2019 cycle mid-top.

asserted CryptoCon.
Maxed-out short-term holder loss backs the bullish outlook. Source: CryptoCon on X.com
Maxed-out short-term holder loss backs the bullish outlook. Source: CryptoCon on X.com

Notably, the charts above do NOT indicate a bullish streak ahead.

The bottom might be in, but more consolidation might follow before a bull market is possible. Darius Tabatabai, the co-founder of Vertex Protocol, agreed, citing low trading volumes on the crypto market and investors’ unwillingness to park their limited assets in the sector.

It feels like fatigue, and with a general pullback in liquidity from market makers, any move lower tends to be more volatile. That said, the environment is challenging, with volumes still low overall and users not returning to crypto in droves as of yet.

he said in an interview with CNBC.

Moreover, as September is a historically challenging month for the alpha crypto, Bitcoin could be stuck in a tight range below $30,000 before Q4/2023.

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Lilit Chichyan

Lilit is a Yerevan-based Markets writer, skilled in 3 languages, and interested in writing about the tech world, trading, art, and science. She also has a background in psychology and marketing, which helps deliver the right message to the target audience.

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