[Bitcoin Now] Invisible Bottom... Indicators Estimating the Low Point Worsen Gradually

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] Indicators suggesting that Bitcoin prices are at a bottom are worsening increasingly. Until these indicators rebound and show a sustained upward trend, the bottoming theory is unlikely to gain strong support.

According to cryptocurrency data firm CryptoQuant on the 8th, Bitcoin's MVRV (Market Value to Realized Value) has been below 1 since the 19th of last month. Moreover, it has been steadily declining, dropping from 0.96 on the 19th of last month to 0.87 on the 6th of this month.

Bitcoin MVRV is an indicator used to estimate whether the price is undervalued, calculated by dividing market capitalization by realized market capitalization. Generally, a value below 1 indicates a bottom. However, since the value continues to decline, it is assessed that an escape from undervaluation has not yet occurred. On July 27, Bitcoin MVRV recorded 1.05 and showed an upward trend, prompting bottoming theories, but it began to decline from the 13th of last month. Bitcoin prices also showed weakness afterward, falling from the $24,000 range to between $19,000 and $20,000 by the end of last month.

Additionally, Bitcoin's NUPL (Net Unrealized Profit and Loss) indicator is also showing a downward trend. NUPL represents unrealized net profit and is calculated by dividing the difference between market capitalization and realized market capitalization by market capitalization. It is used to show whether investors are in profit or loss zones, with negative values indicating more investors are experiencing losses. Except for two days between July 18 and the 18th of last month, it showed positive values, raising expectations for a Bitcoin price increase. However, after recording -0.04 on the 19th of last month, it has continued to decline, falling to -0.14 on the 6th of this month.

Bitcoin prices, which fell more than 6% the previous day, showed an upward trend as the US stock market, which tends to move in sync, closed higher due to rebound buying. According to cryptocurrency market tracking site CoinMarketCap, as of 9:53 AM on the day, Bitcoin was trading at $19,284 (approximately 26.68 million KRW), up 2.47% from the previous day. It rose to $19,424 around 6 AM but has since given back some of the gains.

On the 7th (local time), the Dow Jones Industrial Average closed at 31,581.28, up 1.40% from the previous session. The S&P 500, focused on large-cap stocks, rose 1.83% to 3,979.87, and the tech-heavy Nasdaq closed up 2.14% at 11,791.90. Rebound buying flowed in from the start of trading, leading to a successful index recovery. However, concerns over Federal Reserve (Fed) tightening remained as Fed Vice Chair Lael Brainard argued that interest rates need to be raised further to bring inflation back to target. She also drew investor attention by mentioning the risks of excessive tightening. She stated, "The rapid pace of tightening and global characteristics create uncertainty about the speed at which tightening affects aggregate demand, posing risks related to excessive tightening."

Experts explain that sustained Bitcoin price increases are unlikely. Alexander Lawres, a researcher at cryptocurrency investment consulting firm Quantum Economics, said, "Generally, the current macro environment is hostile to all risk assets, including Bitcoin."

This content was produced with the assistance of AI translation services.