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Here’s When Bitcoin and Ethereum Can Make a Comeback!

Written by: Elena R

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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Jan 28, 2022

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Bitcoin and Ethereum, the two largest cryptocurrencies by market cap, are almost 50 percent down from their ATH set last year. The market sentiment is currently bearish with many predicting that there are more losses to follow. Amid all the bearish blues Kraken predicts a comeback for these two coins.

Kraken claims that Bitcoin’s spent output profit ratio (SOPR) and Ethereum’s market value to realized value (MVRV) Z-score show that ETH and BTC are trading below their fair value, but that a comeback is possible in its January 2022 crypto on-chain digest.

As per the reports, though BTC’s SOPR indicates that most market players are trading BTC at a loss, the situation was considerably worse during Bitcoin’s most recent bull run, falling from $65,000 to $30,000 from May to July 2021 before rebounding to new all-time highs.

Furthermore, the MVRV Z-score for ETH indicates that the cryptocurrency is now in the ‘oversold’ region, where it has struggled to stay for long durations before a price bounce.

The SOPR on-chain indicator determines if Bitcoin owners are profiting or losing money when they sell their coins. If the SOPR is larger than one, the asset is being sold for a profit. Otherwise, they are losing money.

With a reading below 1, BTC’s SOPR indicates gloomy sentiment, although Kraken claims that the indicator was worse last year when Bitcoin fell from $65,000 in May to $30,000 in July.

The MVRV Z-score also shows that Ethereum has an optimistic approach. The statistic is intended to determine if an asset’s price is selling above or below its fair value, which is used to determine market profitability. A rating of more than 5 indicates that ETH is overbought, or selling for more than it is worth. Readings below one suggest that the cryptocurrency is oversold, or trading at a discount to its true value.

The MVRV-Z Score has dropped into the ‘oversold’ zone, with ETH down -49 percent from its all-time high of $4,867 on November 9, 2021. During retracements, ETH’s MVRV Z-score tends to slip to the “oversold” zone, but it doesn’t stay there for long before prices revert.

Also Read : Bullish Outlook For Bitcoin Price! Here’s When BTC Price is Expected To Hit $40K !

The last time Ethereum’s MVRV Z-score dipped into this range was in March 2020, during the Black Thursday market crash. Despite the fact that asset values and network activity are declining, historical on-chain data suggests that all is not lost for ETH. Historically, market participants have built up positions during ‘oversold’ MVRV Z-score levels.

As of the time of writing Bitcoin is trading in green and has gained more than two percent and is trading at $37,137. On the other hand, Ethereum too has gained one percent and is trading at $2475 in the last 24 hours.

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Elena R

Elena is an expert in technical analysis and risk management in cryptocurrency market. She has 10+year experience in writing - accordingly she is avid journalists with a passion towards researching new insights coming into crypto erena.

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