- CryptoQuant analyst suggests a possible reversal if UTXO volume suddenly increases
- Historical data indicated that the reversal could take some time in the face of a possible decline
Bitcoins [BTC] the potential to avoid significant trading below $16,000 could have received a big boost. Indeed, there has been debate about the king coin reaching the lowest point of this cycle. However, not many seem concrete enough, because there were contradictions.
Read Bitcoin [BTC] price forecast 2023-2024
According to CryptoQuant analyst Dan Lim, there is something that rarely happens in bear markets caused. Lim, also an active crypto investor, pointed out that the volume of unspent transaction output (UTXO) surged from a week to a month for the first time since this market situation began.
From here if it was back in time
One possible explanation for this condition was that BTC was close to bottoming out. This was because a similar situation occurred in the 2015 and 2018 cycles. When that happened, the market turned bullish, as shown in the image above.
However, Lim noted that the reversal was not instantaneous and this time it lasted for a longer period of 1444 days. Therefore, there was no guarantee that the extreme market conditions were almost over. Lim said,
“It took 1358 days in 2018 and 1444 days in 2022 to make this move. While the bull markets didn’t start immediately, the part where this move came in was the low point from a cycle perspective. Now I’m not sure what will happen because of the macro issues. The split-buy (accumulation) approach from the long-term perspective could still be the easy answer.”
But were other statistics in line? According to Glassnode, the Market Value to Realized Value (MVRV) z-score was -0.236. Interestingly, the z-score in the negative area since July 2022. The z-score evaluates Bitcoin’s potential to be at fair value or show that it is oversold or overbought.
In its current state, the MVRV Z score indicated that BTC had passed below fair value. However, since it has been in such a state for months, there was no guarantee that the UTXO condition would cause the reversal.
History has its part to play
In addition, the Bitcoin Puell Multiple was in the green zone at 0.469. For context, the Puell Multiple shows the status of the 365-day moving average in daily Bitcoin issuance.
In case the value is between 4 and 8, it indicates market spikes or a red zone. Since the current Puell Multiple was between 0.3 and 0.5, this implied proximity to the bottom. This condition may also indicate a price reversal.
Despite optimistic hopes, Bitcoin’s correlation with the stock market could hinder the turnaround. According to another analyst, Ghoddusifar, the latter was opposed losses a trendline resistance. In the event that it comes to that, BTC could fall further.