Analysis: MVRV indicator suggests BTC could recover strongly in the coming weeks

Although Bitcoin could pull back further, there are signs that its favorable MVRV score and strong fundamentals will help push it higher in the long term. According to CoinGlass data, the Market Value to Realized Value (MVRV) indicator shows that BTC is still undervalued even though it hit an all-time high last week. Its MVRV-Z score has dropped to 2.84 from last week's high of 3.3. Historically, an MVRV-Z score below 3.7 indicates that the asset is undervalued. The MVRV-Z score is an important indicator of the market value and relative value of a token, and is calculated by subtracting the realized market value from the circulating market value and then dividing that number by the standard deviation. Bitcoin's MVRV score was 3.03 in the last major adjustment in March this year and 7 in the last major adjustment in January 2021. Based on this, the score suggests that BTC may recover strongly in the coming weeks. In addition, BTC has some strong fundamentals, including the number of BTC in circulation has fallen to a multi-year low of 2.24 million. In September this year, there were more than 2.72 million BTC on exchanges. This shows that more and more investors are buying BTC and storing it in self-custodial wallets, and some investors are accumulating ETF shares. Another potential catalyst for Bitcoin is that the stablecoin market value has jumped from $122 billion a year ago to nearly $210 billion. Meanwhile, Bitcoin's annual inflation rate continues to decline, from a high of nearly 12% in 2015 to 1.12%, and the decline in inflation is due to halving events and mining difficulty increases. (crypto.news)