Is Bitcoin About to Experience a Major Price Rise? On-chain Data Shows a Price Change is Coming?

Bitcoin continues to face resistance just below the $120,000 mark, struggling to build enough momentum for a breakout. Over the past 24 hours, this cryptocurrency has remained within a narrow trading range above $118,000, falling slightly by nearly 4% from its recent all-time high. Although there is no upward trend, analysts believe that Bitcoin may be entering a phase of energy consolidation rather than signaling an impending recession. According to data from CryptoQuant, two separate market analysts have shared their views on the current cycle of BTC, focusing on long-term valuation metrics and investor behavior patterns that could significantly affect the next price volatility. The MVRV ratio of Bitcoin signals potential bullish momentum. The collaborator of CryptoQuant, CoinCare, emphasized the role of the Market Value to Realized Value (MVRV) ratio in assessing Bitcoin's position in the current market cycle. The MVRV ratio measures whether BTC is trading above or below its perceived fair value, with readings below 1 often marking market bottoms and readings above 3.7 typically associated with market peaks. In a recent post titled "The MVRV indicator is converging towards the 365-day moving average. What will happen next?", CoinCare explains that the MVRV of Bitcoin is currently at 2.2, gradually getting closer to the 365-day moving average.

Analysts note: "Traditionally, when the MVRV ratio converges to the long-term average, it tends to recover and move towards the overvalued range, often accompanied by price growth." Based on historical models, CoinCare predicts that BTC will continue to consolidate before attempting to rise again, with the possibility of re-testing the overvaluation level if buying activity increases significantly. The activities of new investors indicate a healthy end-of-cycle price increase. A separate analysis from another analyst at CryptoQuant, AxelAdlerJr, examined the market structure of Bitcoin based on investor dominance metrics. Data shows that the dominance rate of new investors is currently at 30%, significantly lower than the previous levels indicating an overheated market, which reached 64% and 72% during the local price peaks in March and December 2024. According to AxelAdlerJr, the stable increase in activity from new market participants since July 2024 indicates that new liquidity is flowing into the market, supporting the ongoing bullish sentiment. At the same time, long-term holders are selling at a moderate level, with a coefficient of 0.3, meaning that the supply from coins held for three years or more is being absorbed without causing a strong market adjustment. The analyst stated: "This move shows that although new buyers are active, there is still room for the market before reaching the level of euphoria, which typically occurs when the dominance rate of new investors exceeds 60-70%".