According to U.Today, a detailed analysis of on-chain metrics suggests a possible robust recovery for Bitcoin, following its fall below $60,000. The 'Bitcoin Fundamental Index' by Swissblock, a combined measure of various Bitcoin network health indicators, recently reached what seems to be a turning point, indicating a potential rise in Bitcoin's price.
A key metric to note is the Short-Term Holder MVRV (Market Value to Realized Value), which is currently at 0.96. This ratio essentially compares the market value (the current trading price of Bitcoin) to the realized value (the average price at which coins were last moved). A value below one usually indicates that short-term holders are holding coins at a loss, which can signal a potential bottom if other conditions align.
Historically, when the STH-MVRV has fallen below one, it has often been a precursor to a market recovery. This suggests that the selling pressure from short-term holders is decreasing and could indicate that sellers are exhausted. This exhaustion is further supported by the recent performance of the Bitcoin Fundamental Index, which shows a recovery from lower levels, indicating increased network growth and investor confidence.
The 'Bitcoin Fundamental Index' chart shows significant spikes in the index correlating closely with increases in Bitcoin's price. The index measures several aspects of network health, including transaction volume, wallet activity and other undisclosed proprietary indicators that aim to gauge the overall sentiment and fundamental strength of Bitcoin. The current index value is nearing the higher end of its recent range. Historically, such patterns have indicated strong bullish sentiment building up, especially when combined with a low STH-MVRV.