Analysts Warn of Major Bitcoin Price Move in Q4 Amid Valuation Metrics Reset
Bitcoin is showing signs of being significantly undervalued as its valuations decline from extreme overbought levels. Analysts indicate that high open interest and rising global liquidity may position Bitcoin for a major price move as Q4 progresses. Predictions are mixed, with caution advised due to historical performance trends during US election years, yet there are optimistic targets for Bitcoin’s price as clarity in the political landscape emerges.
As Bitcoin approaches its all-time highs, the valuation metrics have seen a significant decline from their extreme overbought levels recorded in March, now ranging between 17-75% on a four-year Z-score. Jamie Coutts, the chief crypto analyst at Real Vision, revealed these observations in a post dated October 1. He alluded to the market value realized value (MVRV) Z-score, an on-chain metric reflecting Bitcoin’s current market valuation relative to its realized value, which currently stands at -116% for the three-month period, -94% for two years, and -107% for four years. These figures indicate Bitcoin may be substantially undervalued across various time frames. Furthermore, Mr. Coutts noted that Bitcoin’s open interest (OI), a vital gauge for assessing market sentiment and predicting upcoming price movements, has surged to levels 800% higher than those seen over the past four years, despite subdued funding rates. He also stated that global liquidity is on an upward trajectory, emphasizing that the recent market pullback has effectively eliminated excessive bullish sentiment, thus creating a necessary reset for a potential ‘major move higher.’ Lyn Alden, an independent analyst, supports this notion by illustrating a historical correlation between Bitcoin’s price and global liquidity, noting that Bitcoin generally rises with expanding liquidity and declines when liquidity contracts. Indeed, from May 2013 to July 2024, the correlation coefficient between Bitcoin’s price and global liquidity was an impressive 0.94. In light of such dynamics, speculators are eagerly pondering Bitcoin’s performance trajectory for the fourth quarter of 2024. According to data from CoinGlass, Bitcoin had its most prosperous September to date, concluding at 7.29% higher on September 30. Analysts are particularly interested in how Bitcoin may react during a year that not only includes the anticipation of a Bitcoin halving but also coincides with the US election. Timothy Peterson, a Bitcoin analyst, cautioned that Bitcoin’s performance is often ‘significantly weaker’ during US election years compared to non-election years, attributing this volatility to the uncertainty surrounding potential election outcomes which could lead to more cautious investor behavior. Nevertheless, Mr. Peterson suggested that should the political landscape become clearer in November and December, Bitcoin could see a resurgence, harking back to typical market patterns post-election. On a more optimistic note, Archie, the founder of BTC Archive, predicts that following September’s gain, Bitcoin might maintain its upward momentum through the end of the year, potentially reaching a six-figure valuation by year-end.
The context of this discussion centers on Bitcoin’s valuation and price movements in relation to various market metrics and economic indicators. As Bitcoin approaches historical price highs, analysts are assessing its current market valuation, which appears to show signs of being undervalued. Key indicators such as the MVRV Z-score and Bitcoin’s open interest provide insights into market sentiment and expectations for price movements. Additionally, the relationship between Bitcoin’s price and global liquidity shifts underscores the broader economic implications for cryptocurrency markets. Insights from various analysts are helping to shape predictions for Bitcoin’s future performance, particularly in the context of significant events such as the US elections and the Bitcoin halving.
In summary, Bitcoin’s valuation indicators suggest a potential reset that may lead to a significant price increase in Q4 2024. While analysts caution about the uncertainties intrinsic to US election years, they also highlight the strong correlation between Bitcoin’s pricing and global liquidity, which could provide impetus for a bullish trajectory. With predictions ranging from increased investor confidence post-election to bullish momentum driven by global liquidity expansion, the cryptocurrency community is brimming with anticipation for Bitcoin’s future performance.
Original Source: cointelegraph.com
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