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Bitcoin still above undervalued zone; Is 2023 best time to accumulate BTC?

Bitcoin still above undervalued zone; Is 2023 best time to accumulate BTC?

The cryptocurrency market is still recovering the losses suffered after the government initiated an intensified crackdown on cryptocurrencies. Some indicators suggest this is the ideal time to use the bear market and accumulate Bitcoin (BTC).

As it happens, Bitcoin’s market value to realized value (MVRV) broke out of the undervaluation zone on January 19 and is currently standing at 1.12. In the past, a strong breakout was never followed by a fallback below 1.0, as observed by Dan Lim, an analyst at CryptoQuant, on February 15.

However, the crypto analyst noted that this time around, rules seem to be slightly different and that, right now, “as a bear market accompanied by macro issues is underway, it seems better to take a more conservative and long-term split-buy approach.”

Carpe ursam

Furthermore, as Lim continued, it is necessary to look ahead as this could be a good time to accumulate the flagship decentralized finance (DeFi) token before the price increase:

“When we see 2022 and 2023 in the next bull market, this period is likely to be a really good accumulation period. However, it’s unfortunate that so many people buy the most during the late stages of a bull market.”

Bitcoin MVRV ratio. Source: Dan Lim/CryptoQuant

What is MVRV?

Specifically, the MVRV ratio can be used to identify whether or not an asset’s price is reasonable by comparing the price to its real value. As a stand-alone statistic, MVRV has been an effective sign in determining crypto market tops and bottoms.

As a rule of thumb, the lower the MVRV ratio, the greater the likelihood that the observed asset price would increase in the future, as this important indicator measures the average profit or loss of the addresses that had previously invested in the asset.

Bitcoin price analysis

Meanwhile, Bitcoin has started to recover from the week-long losses during which its price declined by 5.02%, and is now trading at $22,126, which represents a modest gain of 1.99% on the day, as the asset is also recording a 6.1% increase over the month.

Bitcoin 7-day price chart. Source: Finbold

It is also important to note that multiple analysts have predicted that Bitcoin’s next halving event, scheduled for 2024, would dramatically ‘push’ the price of the maiden digital asset, including Bloomberg’s senior commodity expert Mike McGlone who believes Bitcoin could hit $100,000 at around that time.

More recently, Robert Kiyosaki, author of the best-selling personal finance book ‘Rich Dad Poor Dad,’ has projected Bitcoin would trade at $500,000 by 2025, as the “faith in [the] US dollar, fake money” is destroyed and gold, silver, and Bitcoin emerge as the alternatives.

According to the crypto trading expert and analyst Michaël van de Poppe, Bitcoin could “make a new low,” but the upside was significantly larger than the downside, given that the “price has bottomed at $15.5K and rallied to $22.1K (…) after Luna, Celsius, Voyager, FTX, 3AC, BlockFi, DCG, and Gemini.”

In the meantime, Bitcoin has also been demonstrating signs of renewed hope in the system, as its fear and greed index is firmly in the greed levels, and unrealized profits have been exceeding losses over the past several weeks, as Finbold reported on February 14.

Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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