Potential Local Bottom for Bitcoin: Analyst Insights

The Bitcoin market is currently navigating a lengthy correction, with the price dropping by 10.4% over the past week. Amid this volatile landscape, analysts are analyzing price trends, and recent on-chain data has indicated possible local bottom targets for the cryptocurrency.

Key Takeaways

Bitcoin has seen significant price corrections since peaking at $126,198.07 in October.
Analyst Ali Martinez highlights potential price bottom targets between $55,900 and $44,700.
Historical data suggests that Bitcoin often establishes a local bottom below specific price ratios.
The MVRV Pricing Bands indicate potential future upside targets if a rebound occurs.

Bitcoin

Where Will Bitcoin Bottom Out?

In a post on November 23, well-known market analyst Ali Martinez provided insights into Bitcoin’s potential downside targets amidst recent price corrections. After reaching an all-time high of $126,198.07 in early October, Bitcoin has faced substantial declines, with prices dropping to around $81,000. While some market participants are increasingly wary of a bear market, many analysts view the recent dips as simple corrections, anticipating a local bottom followed by a price recovery in the upcoming weeks. Using the MVRV Pricing Bands, Martinez pinpointed two key target prices for this potential bottom.

Bitcoin
Source: @ali_charts on X

The MVRV Pricing Bands are levels derived from the Market Value to Realized Value (MVRV) ratio, which helps determine whether a cryptocurrency is overvalued, undervalued, or accurately valued based on the average price that investors have paid. The chart illustrates fixed multiples, such as 0.8x, 1.0x, 2.4x, and 3.2x, representing varying degrees of overvaluation or undervaluation.

Martinez noted that Bitcoin typically forms a local bottom whenever its price drops below the 1.0Realized Price (RP) (green line) or the 0.8RP (blue line), as observed in October 2018, April 2020, and November 2022. Currently, the 1.0RP and 0.8RP are set at $55,914 and $44,713, respectively, suggesting that Bitcoin could still experience a price decline between 35% and 48% before initiating another upward trend.

Conversely, if a bullish resurgence happens before or after approaching these local bottom targets, the MVRV pricing bands suggest significant upside targets, with potential prices reaching $134,195 (2.4RP) and $178,927 (3.2RP).

Current Bitcoin Market Status

As of this writing, Bitcoin is trading at $85,938, reflecting a minor increase of 1.15% in the last 24 hours. However, the asset’s daily trading volume has decreased by 68.09%, currently at $40.75 billion. Alongside Bitcoin's price fluctuations, there has been a notable exodus from US Bitcoin Spot ETFs, with these investment funds experiencing a total net outflow of $4.339 billion over the last month.

Bitcoin
BTC trading at $86,238 on the daily chart | Source: BTCUSDT chart on Tradingview.com