Analyst says Bitcoin could see a smaller drawdown
Bitcoin bulls fell short of flipping the $38,000 level to support, and one analyst said on-chain data signals that BTC could see a smaller drawdown
The cryptocurrency faithful got a reprieve from recent market struggles thanks to a rally in decentralized finance (DeFi) tokens and Dogecoin (DOGE) on June 2. A bit of a breakout in the price of Ether (ETH) and Bitcoin (BTC) may have also lifted sentiment, but at the moment, the top-ranked digital assets are still meeting pushback at key overhead resistance levels
While the uptick in prices has many calling for a continuation of the 2021 bull market, some analysts have highlighted a possible bearish pennant formation on the Bitcoin chart, which could result in a price breakdown to as low as $16,000
Bitcoin’s volatile price action over the past month has led many to speculate on whether the top is in for BTC or the current correction is just a mid-cycle breather that will prepare the asset for continuation once the rally resumes
Deeper insight into the matter was provided in a recent Delphi Digital report that discussed the MVRV ratio, an on-chain metric that measures Bitcoin’s market value (MV) against its realized value (RV) as an indicator that can help traders determine market tops and bottoms
The chart above shows that the MVRV ratio became overextended in early 2011, late 2013 and early 2018, “all of which represented cycle tops,” as highlighted by Delphi Digital. The researchers also suggested that May 2021’s reading could very well indicate the top for this cycle
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