Bitcoin (BTC) and Ethereum (ETH) are currently trading low, but crypto exchange Kraken says the bull run for the two biggest digital assets by market cap may not be over.
KrakenTransaction below the Z-score, ETH and BTC fair values of Bitcoin’s output profit-to-spent (SOPR) and Ethereum’s market capitalization to realized value (MVRV), in the on-chain crypto summary of January 2022 it shows what it sees, but ‘kickback’ is still possible, according to the exchange.
“While BTC’s SOPR showed that market participants were mostly trading BTC at a loss, the situation was much worse during the last bull run correction from May 2021 to July 2021, before Bitcoin returned to all-time highs.
Also, ETH’s MVRV Z score indicates that the crypto asset is currently in the “oversold” zone where it is struggling to stay long before it takes a leap in price.”
The SOPR on-chain metric determines whether Bitcoin holders are selling at profit or loss. If the SOPR is greater than 1, the owners of the asset are selling at a profit. Otherwise, it shows that they are selling at a loss.
BTC’s SOPR is bearish with a level below 1, but Kraken noted that the metric was worse last year when Bitcoin dropped from $65,000 in May to $30,000 in July.
“If the metric breaks level 1 and stays above this level, it could indicate the end of the last bull market correction. However, if Bitcoin stays below the 1 level while the price continues to drop, it could confirm that BTC has entered a bear cycle…
SOPR continues to signal a bearish one at the moment, with on-chain data showing a much worse picture during the last similar market correction and BTC managed to make a very strong comeback after this correction.”
The MVRV Z-score is also Ethereum (ETH) It points to a bullish outlook. This metric is used to assess market profitability based on whether the asset’s price is oversold or below its fair value. A level above 5 indicates that ETH is overbought or selling above its fair value. Levels below 1 indicate that the cryptocurrency is oversold or trading below its value.
ETH fell 49% from its all-time high of $4,867 on November 9, 2021, with the MVRV-Z Score falling into the ‘oversold’ zone. It shows that ETH’s MVRV Z-score tends to fall into the “oversold” zone during pullbacks but does not stay in that range long before prices bounce back.
Ethereum’s MVRV Z score last fell into this region during the Black Thursday market crash in March 2020. While asset values and network activity have receded, on-chain data shows that all is not bleak for ETH. Market participants have historically accumulated during ‘oversold’ MVRV Z-score readings.”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.