• Bitcoin is currently in an accumulation zone, trading below its realized price, and the MVRV ratio is below one, signaling it is oversold.
• 2022’s biggest lesson for the crypto market was that economic factors have a heavy hand in Bitcoin’s performance.
• If the U.S cannot combat inflation, this might lead to higher inflation and a dive into economic recession, which could have an impact on Bitcoin depending on the state of the dollar.
The cryptocurrency market has been through a rollercoaster of a ride in the past few months. The price of Bitcoin has been fluctuating significantly, and the market is still trying to get a grasp of its current state and the path it may take in the future. The question that many investors and traders are asking is whether Bitcoin is indeed in an accumulation zone and when the next bull run is likely to occur.
To answer this question, it is important to look at the pricing model of Bitcoin and how it has been performing since September of 2022. According to data from Glassnode, Bitcoin has been trading below its realized price since then, which is a significant indicator that the bearish cycle is coming to an end. This is further reinforced by the MVRV ratio, which is still below one, meaning that Bitcoin is still oversold. This suggests that accumulation is likely to take place and that there is renewed hope for a long-term recovery.
However, in order to make informed decisions as to whether a major rally in 2023 and 2024 is likely, it is important to consider economic factors as well. The economic outlook for the U.S. is particularly concerning. Inflation has been on the rise and the government has been borrowing money in order to combat it. If the U.S. is not able to successfully tackle the issue, it could lead to a dive into economic recession.
In this situation, the value of the dollar is of utmost importance. If more countries start to abandon the dollar as the global reserve currency, it could lead to a shift in favor of hard assets, such as gold and Bitcoin. On the other hand, if the U.S. is able to successfully tackle inflation and maintain its status as the global reserve currency, then the impact on Bitcoin may not be as significant.
Overall, the state of Bitcoin is still uncertain and it is impossible to predict how it will perform in the long-term. Investors should be aware of the economic factors that could have an impact on the cryptocurrency market and make their decisions accordingly. The best strategy may be to diversify one’s portfolio and invest cautiously.