Bitcoin Gauges Reset and Point to ‘Major Activity’ in Q4 – Analysts
The price of Bitcoin (BTC) is trading 7% below the domestic high of $66,508 reached on September 27, but some analysts are optimistic that this correction could be a reset of key parameters as BTC prepares for big gains in the final quarter of 2024.
“Bitcoin is at an all-time high, but valuation metrics have all declined from being overbought in March to 17-75% in 4-year Z-score,” said Jamie Coates, chief crypto analyst at RealVision. October 1 post by X.
What Coates is referring to is an on-chain metric called market value realized value (MVRV) Z-score, which shows where market value is relative to fair value, which is -116% over a three-month time frame, -94% over a two-year period and -107% over a four-year period. -year time frame. This shows that Bitcoin is extremely undervalued on multiple time frames.
The analyst also explained that Bitcoin's open interest (OI) is high, a key metric that investors use to assess market sentiment and predict future price movements. Sustainable Futures OI is up 800% over the past four years.
“Open interest is high both nominally and relatively, but liquidity has weakened.”
Basics of the Bitcoin Network. Source: Jamie Coates
“Global liquidity is accelerating upwards,” Coates said, adding that the pullback over the past six months has removed “excess bullishness” from the market and created the reset needed for “a big move”.
According to a report by independent analyst Lynn Alden, Bitcoin's price has historically been tied to global liquidity, with BTC's price generally increasing as liquidity expands and adjusting as global liquidity decreases.
The chart below shows that Bitcoin price has a correlation of 0.94 with global liquidity for the period May 2013 to July 2024, indicating a very strong positive correlation.
BTC Price vs Global M2 Money Supply. Source: Lynn Alden
This suggests that an increase in global liquidity may be a precursor to a corresponding increase in the value of Bitcoin.
Related: 3 Signs That Bitcoin's Q3 Close Is Bullish
How High Can Bitcoin Go in Q4?
Additional data from CoinGlass shows that it closed up 7.29% on September 30, recording the greenest September in history. This has led to speculations among traders and analysts as to how Bitcoin will perform during the last quarter of 2024. Bitcoin Half Year and US Election Year.
Bitcoin analyst Timothy Peterson said in a recent analysis of X that it tends to be “significantly weaker” during US election years compared to post-election years.
Peterson attributes this weakness to uncertainty surrounding election results, which creates market volatility and more cautious behavior among investors. Bitcoin reacts strongly to this uncertainty, resulting in muted or negative reactions.
Peterson stated that the price of Bitcoin could register more gains in November and December when investors get a clear view of the effects of political results.
“Once election results are known and markets have a clear picture of the political landscape, investor confidence typically returns, and the focus shifts to broader economic and market conditions, allowing Bitcoin's price movement to normalize in both election and non-election years.
Bitcoin performance in October. Source: Timothy Peterson
Meanwhile, Archie, the founder of the BTC archive, believes that Bitcoin can continue to rally in the last quarter of 2024, after registering a green September, targeting six figures for BTC by the end of the year.
Bitcoin price targets for Q4/2024. Source: Arch
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
