Bitcoin (BTC) and Ethereum (ETH) are currently trading at a discount, but crypto exchange Kraken says the bull run for the two biggest digital assets by market cap may not be over. Cryptocoin metric analysis of the famous stock market. We have prepared for com readers.
Kraken says don’t delete Bitcoin (BTC) yet
Kraken reported in its on-chain crypto report from January 2022 that the MVRV-Z score of Bitcoin’s output profit-spent (SOPR) and Ethereum’s market cap to realized value shows that ETH and BTC are trading below their fair values, but a says recovery is possible:
BTC’s SOPR shows that the majority of market participants are trading BTC at a loss. However, the situation was much worse than that during the last bull run correction from May 2021 to July 2021, before Bitcoin returned to ATH levels. Also, ETH’s MVRV-Z score indicates that the altcoin is currently in the “oversold” region, where it is struggling to stay long before prices take a leap.
SOPR on-chain metric determines whether Bitcoin holders are selling at profit or loss. If the SOPR is greater than 1, it means that the owners of the asset are selling at a profit, otherwise at a loss. BTC’s SOPR is bearish with data below 1, but Kraken notes that the metric was worse last year when Bitcoin dropped from $65,000 in May to $30,000 in July:
If the metric breaks the 1 reading and stays above this level, it could indicate the end of the last bull market correction. However, if Bitcoin stays below 1 while the price continues to drop, it could confirm that BTC has entered a bear cycle. While SOPR is currently signaling bearish, on-chain data painted a much worse picture during the last similar market correction, after which BTC managed to make a strong comeback. In other words, don’t delete BTC just yet.
“Data shows that not everything is bleak and bad for ETH”
The MVRV-Z score also points to a bullish outlook for Ethereum. This metric is used to evaluate market profitability based on whether the asset is selling above or below its fair value. Data above 5 indicates that ETH is overbought or oversold at fair value. Data below 1 indicates that the altcoin is oversold or trading below its value.
ETH fell 49% from the ATH level of $4,867 on November 9, 2021, with the MVRV-Z Score falling into the ‘oversold’ zone. History shows that ETH’s MVRV-Z score tends to fall into the “oversold” zone during pullbacks, but not so long before prices bounce back:
Ethereum’s MVRV-Z score last fell into this region during the Black Thursday market crash in March 2020. While asset values and network activity have receded, on-chain data shows that all is not bleak for ETH. Market participants have historically accumulated during the ‘oversold’ MVRV-Z score.
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