Bitcoin (BTC) continues to face resistance near the $120,000 mark, struggling to accumulate enough momentum to break through. Over the past 24 hours, the cryptocurrency has remained within a narrow fluctuation range above $118,000, down nearly 4% from recent historical highs.
Despite the lack of upward momentum, analysts believe Bitcoin may be entering an energy consolidation phase rather than signaling an impending decline.
According to CryptoQuant data, two different market analysts shared their views on the current BTC cycle, focusing on long-term valuation indicators and investor activity patterns that may affect the next significant price movement.
The Bitcoin MVRV ratio indicates potential upward momentum
CryptoQuant contributor CoinCare emphasized the role of the market value to realized value (MVRV) ratio in assessing Bitcoin's position in the current market cycle.
The MVRV ratio measures whether BTC's trading price is above or below its fair value; readings below 1 typically signify a market bottom, while readings above 3.7 are usually associated with market peaks.
CoinCare explained in a recent article titled "The MVRV indicator is converging towards its 365-day moving average. What happens next?" that Bitcoin's MVRV is currently 2.2 and is gradually approaching its 365-day moving average.
The analyst pointed out: "Historically, when the MVRV ratio approaches its long-term average, it tends to rebound and move toward overvalued areas, usually accompanied by price increases."
Based on historical patterns, CoinCare expects BTC to continue consolidating before attempting to rise again, potentially retesting overvaluation levels if buying activity strengthens.
New investor activity indicates a healthy bull market cycle in the later stages
Another CryptoQuant analyst, AxelAdlerJr, conducted a separate analysis, studying Bitcoin's market structure based on investor-dominant indicators.
Data shows that the current proportion of new investors is 30%, well below the levels that previously indicated an overheated market, with new investor proportions reaching 64% and 72% during local price peaks in March and December 2024, respectively.
AxelAdlerJr stated that since July 2024, the activity of new market participants has steadily increased, indicating that new liquidity is entering the market, supporting sustained bullish sentiment.
Meanwhile, long-term holders are moderately selling, with a coefficient of 0.3, meaning that the supply of tokens held for three years or more is being absorbed without triggering significant market adjustments.
The analyst stated: "This dynamic suggests that even though new buyers are active, there is still room before the market reaches euphoria levels, which typically occurs when new investors account for more than 60-70%."
