The cryptocurrency market experienced a slight recovery led by Bitcoin following the release of lower-than-expected U.S. CPI data. However, on March 13, Bitcoin’s price fell back to the $80,000 mark, causing altcoins to lose their daily gains. Amid rising market volatility, uncertainty persists, but CryptoQuant analyst Crypto Dan suggests that the market may be poised for a potential upswing despite the overselling.
Market Enters Oversold Territory, Ready for Revaluation!
In a recent social media post, CryptoQuant analyst Crypto Dan explained that the market has entered the oversold zone following a significant correction, as indicated by Bitcoin’s price movements. He noted that the percentage of investors holding BTC for one week to one month is currently 23% and 24.5% for March and December 2024, respectively.
The MVRV (Market Value to Realized Value) indicator, which assesses Bitcoin’s price during its correction phase, has recently dropped to 1.8. This decline mirrors similar drops observed during past correction periods. The MVRV metric measures the cost basis of purchases, indicating the potential for revaluation in cryptocurrencies.
Last year, during a correction phase, the MVRV ratio fell to 1.7. The analyst pointed out that if BTC’s price drops to $70,000, the MVRV ratio would also decrease. However, he emphasized that even without further declines, the market has lost significant value, suggesting that a rebound could be on the horizon. The data fundamentally indicates that the market is in an oversold condition, with cryptocurrencies trading below their intrinsic values after continuous declines.
Crypto Market May Begin to Recover: Key Factors for Investors to Monitor
Currently in the second half of the ongoing Bitcoin bull season, the market is undergoing a strong correction. Analyst Dan highlighted that confidence in risky assets has waned, but the likelihood of recovery from the oversold region has increased. He outlined several factors that investors should keep an eye on:
- How strong will the recovery be?
- Movements of whales and changes in on-chain data during the recovery phase
- Correlation with stock market trends and economic indicators
While the current market is experiencing a downturn, most cryptocurrencies, including Bitcoin, are in an oversold state, making a recovery seem imminent. It appears unlikely that a full-blown bear cycle has just begun.
However, even if the anticipated market rally commences, expectations for significant gains in altcoins have diminished considerably. According to recent CMC data, Bitcoin dominance remains above 60%, and the Fear and Greed Index is at 21, indicating a state of fear in the market.
