Bitcoin: This sudden surge could spell redemption for BTC, but…

  • CryptoQuant analyst suggests a possible reversal as UTXO volume hits sudden surge
  • Historical data indicated that the reversal may take some time in the face of potential decline

Bitcoins [BTC] potential to avoid significant trading below $16,000 may have been given a major boost. There have actually been discussions that the king coin is hitting its lowest point in this cycle. However, not many seem concrete enough, as there would have been contradictions.

Read Bitcoins [BTC] price forecast 2023-2024

According to CryptoQuant analyst Dan Lim, something that rarely happens in bear markets has been triggered. Lim, also an active crypto investor, pointed out that the volume of one week to one month unused transaction output (UTXO) increased sharply for the first time since this market condition began.

Source: CryptoQuant

Up from here if it was back in time

A possible explanation for this state of affairs was that BTC had almost bottomed out. This was because a similar situation occurred in the 2015 and 2018 cycles. When it did, the market turned bullish as shown in the image above.

However, Lim noted that the reversal was not immediate, and this time it took a longer period of 1,444 days. Therefore, there was no guarantee that the extreme market condition was almost over. Lim said,

“It took 1358 days in 2018 and 1444 days in 2022 to make this movement. Although bull markets were not started immediately, the part where this movement came out was the bottom from a cycle perspective. Now I’m not sure what will happen because of the macro issues. The split purchase (accumulation) approach from a long-term perspective may still be the simple answer.”

But were other calculations correct? According to Glassnode, the z-score for market value to realized value (MVRV) was -0.236. Interestingly, the z-score had been in negative area since July 2022. The z-score assesses the potential of Bitcoin to be at fair value or to show that it is oversold or overbought.

Bitcoin mvrv z-score

Source: Glassnode

In the current state, the MVRV Z-score indicated that BTC had crossed below fair value. However, since it has been in such a state for several months, there was no guarantee that the UTXO state would trigger the reversal.

History has its role to play

Additionally, the Bitcoin Puell Multiple was in the green zone at 0.469. For context, the Puell Multiple shows the status of the 365-day moving average in daily Bitcoin issuance.

In a case where the value is between 4 and 8, it means market tops or a red zone. Since the current Puell multiple was between 0.3 to 0.5, it suggested proximity to the bottom. This condition can also indicate a price reversal.

Bitcoin Puell Multiple

Source: Glasnnode

Despite bullish hopes, Bitcoins are context with the stock market can prevent the reversal. As another analyst, Ghoddusifar opined, the latter faced loser a trendline resistance. In case that happens, BTC could fall further.

Bitcoin correlation with the stock market

Source: CryptoQuant

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