Bitcoin hit bottom, according to the MVRV indicator

The MVRV (Market-Value-to-Realized-Value) indicator is a key thermometer that compares the current market value of bitcoin (BTC) with the price at which its coins were purchased on average, revealing whether the market is overheated (overvalued) or oversold (undervalued).

Recently, The MVRV fell to levels it had not touched since last Aprilapproaching the range identified as the “profit floor” (highlighted on the chart with the yellow box) of this bull run, presents an analysis by the firm CryptoQuant.

Since the beginning of 2024, the MVRV ratio has found particularly strong support in the 1.7 to 1.8 range. Each time the market has retreated to this level, the selling pressure has decreased significantly.

CryptoQuant interprets this range as the definitive “buy the dip” zone for the current cycle. A retreat of the MVRV to this “profit floor” would be equivalent to a price for bitcoin in the range of $91,800 to $97,200. For now, the digital asset is trading at $101,600 today.

Divergence and volatility patterns to watch in bitcoin

Despite hitting crucial support, the market is showing signs of weakening momentum via the bearish MVRV divergence (marked with the red dotted line on the chart above). This divergence indicates that while the price of the digital asset has risen, the market’s total unrealized gain, or «speculative heat,» is decreasing, the firm details.

Although this is a classic sign of weakening momentum, the analysis firm highlights that «it does not automatically mean that the bear market has arrived»citing a similar divergence in 2017 that preceded an eventual parabolic growth.

Beyond the MVRV, bitcoin price action is forming an “expanding wedge” chart pattern. This pattern, although it keeps the digital asset technically in an uptrend, signals extreme volatility in the short term. This is usually considered a ceiling pattern, since This type of volatile «expansion» is unsustainable and often culminates when one side, usually the buyers,runs out, causing a fall.

Despite volatile technical patterns, market volume shows that new buyers continue to steadily absorb supply. This absorption could be reinforced with the potential passage of the CLARITY Act by the end of the year, says CryptoQuant.

As NoticiasVE previously reported, this bill seeks to establish regulatory clarity for digital assets in the United States, specifying which are commodities and which are securities, and defining control roles between the SEC and the CFTC, which could attract a new wave of participants to the market.