Crypto analyst Benjamin Cowen has identified a potential indicator for predicting the end of Bitcoin’s bull market. He’s focusing on the MVRV Z-score.
Understanding the MVRV Z-Score
The MVRV Z-score compares Bitcoin’s market cap to the value of each coin when it was last moved. This helps determine if Bitcoin is undervalued, overvalued, or fairly priced.
Cowen’s Analysis
Historically, Bitcoin market peaks have coincided with MVRV Z-scores between 7 and 10. Past examples include a score of 7.68 in one cycle and 7.15 in another. The current cycle’s highest Z-score is only 3.29. While this doesn’t guarantee anything, it’s a useful tool to gauge market sentiment and potential tops. Cowen points out that in March 2024, the market felt overheated, but the MVRV Z-score indicated it wasn’t a true market peak.
The Takeaway
The MVRV Z-score is a valuable addition to any Bitcoin investor’s toolkit, helping to better understand market cycles and potential tops. However, it’s crucial to remember that this is just one indicator among many and should not be relied upon solely for investment decisions. Always conduct thorough research before making any investment decisions. At the time of writing, Bitcoin is trading at $96,253.
