Is a Major Rebound Ahead for BTC?

Bitcoin (BTC) price has continued to validate short-term bearish sentiment after sliding below $95k on Wednesday, during the mid-morning of the New York trading session. The flagship coin has experienced a significant decline in bullish momentum since mid-November. 

The upcoming second inauguration of pro-crypto President-elect Donald Trump Donald Trump Donald Trump is an American former president politician, businessman, and media personality, who served as the 45th president of the U.S. between 2017 to 2021. Trump earned a Bachelor of science in economics from the University of Pennsylvania in 1968. Trump won the 2016 presidential election as the Republican Party nominee against Democratic Party nominee Hillary Clinton while losing the popular vote. As president, Trump ordered a travel ban on citizens from several Muslim-majority countries, diverted military funding toward building a wall on the U.S.–Mexico border, and implemented a family separation policy. Trump has remained a prominent figure in the Republican Party and is considered a likely candidate for the 2024 presidential election President is likely to turn into a sell-the-news event amid heightened hype. Moreover, Bitcoin’s Futures Open Interest (OI), which is used to predict midterm expectations, has remained stagnant in the past two months.

Midterm Expectations for Bitcoin Price Via MVRV Pricing Bands

With the fear of Bitcoin price continuing in bearish sentiments in the coming days, possibly below $90k, the Market Value to Realized Value (MVRV) indicator has been suggesting a major rebound ahead. Currently, Bitcoin’s MVRV ratio is above the 1-year Moving Average (MA) of 2.18.

Historically, Bitcoin price has spent around 5 percent of its trading days above the 3.2 MVRV ratio. Typically, Glassnode noted that the threshold for extreme euphoria is achieved after hitting above the 3.2 MVRV ratio. 

As such, if Bitcoin price were to reach the 3.2 MVRV ratio, which is associated with extreme euphoria, the corresponding value would be around $132k.

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Market Picture

Bitcoin price has continued to experience diminishing returns amid the ongoing mainstream adoption led by institutional investors. However, the rising confidence in Bitcoin will continue to attract more cash flows from the Gold market and the traditional financial (TradFi) in the coming years. 

Moreover, more nation-states will likely follow El Salvador after the United States under the Donald Trump administration implements a strategic Bitcoin reserve. As a result, the demand vs supply shocks will continue to increase amid rising demand from long-term investors.

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