Crypto analyst Benjamin Cowen says one on-chain indicator suggests Bitcoin (BTC) could be on the verge of entering an accumulation phase.
Cowen tells his 754,000 YouTube subscribers the market value to real value Z-score (MVRV Z-score) has a “fairly decent track record” of identifying accumulation zones for Bitcoin.
The MVRV Z-score compares an asset’s market value to its realized value and is used to detect overbought or oversold conditions. It is calculated by taking the market cap, subtracting the realized cap, and then dividing by the standard deviation of the market cap.
Explains Cowen,
“The point is once it goes below, say, zero, you could argue that in fact it is being reset. Once it goes below zero, we eventually find some type of a market cycle bottom and we go into an accumulation phase, and we gear up for the next bull run.
You can see recently, the MVRV Z-score in fact did go below zero, but you can also see if you zoom in here, it’s not necessarily at a bottom yet…
Hindsight will of course tell us. But there simply is no way to know yet if is bottomed. Based on previous bear markets, you can see that every other bear market that Bitcoin has had when looking at the MVRV Z-score, it did in fact ultimately go lower than it is right now.”
Bitcoin is trading for $20,331.33 at time of writing. The top-ranked crypto asset by market cap is down more than 1% in the past 24 hours.
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