Bitcoin price continues its strong upward momentum, with a jump of over 15% in the last week. BTC price has reached the important 200-WMA level above $25,000. Meanwhile, investors are speculating whether the recent rally is a "bull trap" and should avoid or join in the buying of Bitcoin at current levels. The following five metrics in the chain indicate that the bottom of the Bitcoin cycle has already been reached.
1. MVRV ratio
The MVRV Ratio metric is the ratio of crypto market capitalization to realized market capitalization. It shows whether Bitcoin price is overvalued or undervalued. Historically, values below 1 indicate the bottom of the BTC price.
The MVRV ratio for Bitcoin started to rise above 1 in mid-January, indicating that the price of Bitcoin had bottomed out and entered a bull market cycle. The ratio is currently at 1.22, still low for investors to take the opportunity.
2. Supply in Loss (%)
Supply in Loss is the ratio of total UTXO value in loss to total UTXO value. It shows the percentage of Bitcoin held at a loss by investors, reflecting market sentiment.
Supply in Loss (%) has decreased rapidly since January, which indicates that the price of BTC has declined.
3. SOPR ratio
The SOPR ratio is calculated as the Spent Output Profit Ratio (SOPR) of long-term holders divided by the SOPR of short-term holders. A higher value of the ratio means that the profit is spent by the long-term holder higher than the short-term holder. It is usually useful for finding market tops and short-term market behavior. The SOPR ratio also confirms the Bitcoin bullish scenario.
Bitcoin price
Source: CryptoQuant
4. Net Unrealized Profit/Loss (NUPL)
Net Unrealized Profit and Loss (NUPL) is the difference between capital and realized limit divided by market capitalization. It shows total gains and losses in all BTC in circulation. A value above '0' indicates that the investor is making a profit and an increasing value trend means that more investors are starting to make a profit. Currently, the value is at 0.18.
5. Puell Multiple
The Puell Multiple measures the ratio of the daily issue to the moving average of the daily issue. It verifies if the price of Bitcoin is overvalued or undervalued compared to the historical issue rate. A value below 0.5 indicates a price formation below. Currently, the Puell Multiple is 1.07, indicating bullish momentum after the bottom formation in January.
