- Bitcoin holders could accumulate more, which could prompt suggestions of a price increase.
- A crucial indicator revealed that BTC could fall again before hitting another record high.
Investing in crypto can be risky. But one thing is Bitcoin [BTC]the cryptocurrency with the largest market capitalization, has shown that choosing the coin can yield rewards that only a few assets can dream of.
But don’t take AMBCrypto’s word as advice.
Instead, a quick look at BTC’s all-time performance showed that this is no fluke. According to data from CoinMarketCap, the price of Bitcoin has increased by a whopping 103,942,579% since its inception.
However, one thing investors can assure you is that it’s not all glitz and glamor on the Bitcoin side.
For example, the 2022 market crash was proof that “up only” is just a myth, as any Bitcoin investment can fall once the market enters a bear phase.
Watch out! The direction is not always north
In 2021, Bitcoin reached an All-Time High (ATH) of $69,000. But a year ago, caused by certain events, the currency fell below $16,000, confirming that asset volatility could have an unpleasant impact on investors.
Fast forward to 2024, the coin surpassed its all-time high, reaching $73,750 on March 14. Despite the rise, the currency returned. At the time of writing, it has changed hands for $64,298.
This value represented a decline of 5.58% over the past 30 days. But is Bitcoin a good investment for you? Well, certain factors influence the price of the coin.
For example, the approval of spot Bitcoin ETFs earlier this year influenced the rally to a new all-time high. However, the astonishing inflow of the first quarter is nowhere to be seen.
As such, investors are left with the fundamental data and key indicators they can rely on. To start, AMBCrypto looked at Bitcoin’s potential to earn good returns using on-chain metrics.
There may be more gains to come
One of the metrics we looked at was the market value to realized value ratio (MVRV). The MVRV ratio shows the profitability of BTC holders.
At the time of writing, the 30-day MVRV ratio was 1.1.9%. This means that if Bitcoin holders sell their assets, the average return would be around this percentage.
Source: Santiment
But this is unlikely to happen given the unrealized gains don’t seem appealing enough to cause a widespread sell-off. Therefore, the reasonable action would be for investors to hold on to their coins.
Furthermore, when the MVRV ratio was 21.30%, the price of Bitcoin was over $71,000. With this data, more accumulation could occur, and this could lead BTC back to a more profitable region.
Will Bitcoin add an additional 40% increase?
Furthermore, there are predictions that the coin could reach $100,000 this cycle. While some argue in favor of the prediction, others prefer to stay on the conservative side.
For the bullish investors, the ETF and ATH before the halving were proof that Bitcoin could add another 40% to its price before reaching the top.
AMBCrypto spoke to Ben Cousens about the issue. Cousens is Chief Strategy Officer at ZBD, a company that uses the Bitcoin Lightning network to enable payments.
Although the head of the ZBD did not make a specific price prediction, he showed optimism in his comments, saying:
“Within the Bitcoin ecosystem as a whole, the halving has historically coincided with rising fiat prices due to the supply shock. its halving came at a time when ETFs were increasing institutional adoption and playing a bigger role with more impact. The added excitement about the halving is leading to a new cohort of users learning to use Bitcoin.”
Based on Cousens’ opinion, there could be a new wave of new investors for Bitcoin. If this were the case, rising demand could lead to higher prices, and most investments could be worthwhile.
A short-term outlook may not be enough
However, short-term investors may need to be wary. While BTC can be a good investment, its price can also undergo a correction.
One of the reasons for this is the Network Value to Transaction (NVT) ratio. This metric looks at a coin’s market capitalization relative to its total trading volume.
If the NVT ratio rises, it means that the currency may be overvalued in the short term. However, a low NVT ratio indicates an undervaluation of the current asset value.
At the time of writing, the data is from IntoTheBlock showed that Bitcoin’s NVT ratio had risen to 98.79, implying that a return below $64,000 could be imminent.
Source: Santiment
If this is the case, Bitcoin’s price could collapse again to $59,000. But in the long run, Bitcoin can be a good investment depending on the purchase price.
Read Bitcoin’s [BTC] Price forecast 2024-2025
For this cycle, the price of the coin is expected to be between $87,000 and $92,000. Therefore, buying at the press time price or waiting for another decline could be a good move.
In any case, investors should be alert to events in the ecosystem, as an adverse event could invalidate this statement.