After much turmoil for Bitcoin in recent days, there are now signs that we are looking at an undervalued Bitcoin. If so, we are also bearing witness to a major bottom for the coin which could mean that the world’s most popular coin may be poised to make a comeback.
So far today, things are looking up for Bitcoin. On the charts, we can see evidence of a change in direction as well as the fact that BTC is currently (at the time of writing) trading at $6242 which is an increase of more than 15% for the day. There are also other indicators that could spell good news for Bitcoin going forward.
Evidence of Bitcoin being undervalued can be seen by looking at the MVRV Z-score. The score deals with market value as it is calculated across many of the world’s largest crypto exchanges. It also looks at how much all the Bitcoins in circulation were priced. The Z-score shows how far prices are from a realized value.
Traditionally, when an asset has gone into negative numbers on the z-score it is an indicator that the asset has reached the bottom. We have seen Bitcoin is a similar situation before, a couple of times. Each time, when the Z-score reached similar levels to what we saw on Tuesday, it was only a matter of time for Bitcoin to rebound and switch into Bull market mode.
Break From the Traditional Markets
On Thursday, Bitcoin seemed to do what the Z-score predicted. Of course, there were certainly many factors at play but it certainly seems that the bottom came and went as the MVRV Z-score data indicated.
Until Thursday, Bitcoin and the rest of the crypto market was moving eerily close to the stocks, bond, and commodities markets. Major bouts of fear and uncertainty have sent the stock markets around the world into a tailspin, and crypto was along for the ride.
Has Bitcoin made a break from the stock markets? Looking at Thursday’s chart data in comparison to that of major global stocks and bonds markets, it would appear so. The fact that fiat currencies are currently experiencing historically low trading value while crypto is now on the rise is yet another sign pointing in a positive direction.
Looking at the charts, we can see some evidence of a slowing bear run and seller exhaustion. On the daily charts, for example, we can see that Bitcoin was able to defend a support set at $5000. Dipping further south of that would have confirmed a further slip downward. The MACD is also showing that the bearish trend is slowing.
The hourly charts also show positive signs for BTC valuation. Strong, green marubozu candles throughout the day indicate that there is a major increase in confidence when it comes to buying Bitcoin. If this is the case, the bulls seem set to take charge once again which would mean prices of nearly $6500 as the next target to beat.