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Bitcoin's open interest and MVRV ratio suggests undervaluation, Bitfinex report indicates.
The open interest (OI) funding rate for Bitcoin (BTC) futures and the MVRV ratio are showing “advantageous buying opportunity,” according to the latest “Bitfinex Alpha” report.
The OI turned positive on April 24, suggesting a growing interest in long positions and a shift from bearish to bullish market sentiment. Meanwhile, the MVRV, which measures Bitcoin’s market value versus its fair value, has declined to 2.21, hinting at potential undervaluation.
“When the MVRV ratio dips below its 90-day average, which is currently at 2.44, it has been followed by significant returns for the underlying asset, averaging 67 percent. This pattern indicates that the current juncture might be a lucrative time for Bitcoin investments,” the report pointed out.
However, the report highlights that BTC is repeatedly testing its support level, which might result in a more significant price correction. A move towards the $71,000 range highs could signal market strength and attract buyers, while failure to ascend could indicate a bearish shift.
The report also touches on the diminishing impact of Bitcoin halvings on the market, with smaller price increases on each new event. Nevertheless, despite a trend of diminishing returns post-halving, the market appears more mature and stable.
Losing dominance
Bitcoin’s dominance patterns around halving events are also discussed, with a recent drop in BTC dominance to 57% post-halving, indicating a shift towards altcoins. Ether’s performance, in particular, has outpaced Bitcoin, with a 7.5% increase in the ETH/BTC trading pair, despite regulatory challenges from the US Securities and Exchange Commission.
“Ether’s role as a proxy for the altcoin market often positions it as a first mover before other altcoins catch up in terms of market trends. Its performance can serve as a bellwether for the broader altcoin market, hinting at potential rallies or retracements. For investors and market observers, tracking Ether’s performance against Bitcoin offers valuable insights into the health and direction of the wider cryptocurrency market, especially during periods of regulatory uncertainty and market volatility.”
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