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Is now the right time to start accumulating Bitcoin?

Since it is impossible to predict when the market will bottom, Bitcoin (BTC) has been stuck in a rut, and its price is likely to persist in its downward trend. Nevertheless, several on-chain signs indicate now as the ideal time to begin accumulating Bitcoin.

Photo by Kanchanara / Unsplash

The BTC bulls (1) are struggling to flip $19,000 to $20,000 back for support as the price fell below $19,000 last week. Federal Reserve Chairman Jerome Powell (2) reaffirmed the Fed's commitment to doing whatever it takes to combat inflation, and market analysts have increased their predictions for rate hikes from 0.50 basis points to roughly 0.75.

Interest rate increases and quantitative tightening are intended to reduce consumer demand, which lowers the cost of goods and services. Additional rate increases and QT are likely to drive down the stock market and increase the price of Bitcoin because a further decline for BTC will likely result.

Compared to the prior drawdowns from all-time highs, the price of Bitcoin (3) has fallen by 72% as of this writing. In the previous bear market, the price of BTC experienced a 55% correction, a 71% decline, and an 84% correction in December 2018.

The price has fallen below the 2-year moving average, which has formed a trough and consolidated over several months before resuming the 12-year uptrend when the data is compared to it. There is no indication that a trough is being dug, and if the historicals are to be trusted, the price is currently in a zone of consolidation.

An on-chain indicator called MVRV (4) just had its lowest score; this is because the metric is essentially a comparison of BTC's market capitalization to its realized capitalization—i.e., how much people paid for it—recently saw its lowest score. History has shown that market tops occur when market value exceeds realized value, while market bottoms occur when the converse is true.

The present MVRC score of -0.16 is within the range of the prior multi-year and cycle bottoms for the price of bitcoin (5), indicating a pure interpretation of the data that shows that bitcoin is bottoming out and possibly entering the early phases of accumulation. As the market is being battered by bearish factors, which are anticipated to continue to affect cryptocurrency prices, their prices could fall much more.

Even if the cryptocurrency market is in poor form and it appears doubtful that anything will change shortly, most traders cannot predict when the market will bottom out since it is impossible to have a convergence of several metrics and indicators that support their thesis.