Key Points
- Bitcoin (BTC) could be nearing its market top according to S&P 500 correlation.
- However, the MVRV Z-score suggests that there’s still potential for a further increase.
Bitcoin’s [BTC] price range of $60K—$71K has entered its third month. The declining odds of Federal rate cuts appear to be reducing the chances of a breakout in the near term.
During this phase of consolidation, one analyst has suggested that BTC might be closer to its market peak than previously thought. Based on the S&P 500 Index (SPX), CryptoCon, a crypto analyst, has drawn interesting parallels.
Market Top Correlation
According to CryptoCon, the peak of BTC usually occurs a few weeks after the SPX hits a market cycle peak. The most noteworthy finding was that it took approximately 134 weeks to reach the SPX peak from the last BTC cycle peak.
This correlation suggests that BTC could reach a cycle peak by the end of July 2024. However, correlation doesn’t necessarily imply causation, so an SPX peak might not automatically trigger a BTC cycle peak.
Another user agreed with the SPX/BTC correlation, stating, “As SPX rises in value, investors look for further down the risk curve for more profit. This is how liquidity shuffles into BTC and other risk assets.”
Potential for Further Increase
Despite the correlation with SPX, the Market Value to Realized Value (MVRV) Z-score suggests that there might be more room for upward movement before the market tops out.
The MVRV Z-score measures BTC’s undervaluation or overvaluation compared to its ‘fair value’ from a long-term perspective. Historically, BTC has peaked when the metric reached the pink area (value 7 – 9).
At the time of writing, the metric was just above 2, suggesting a lot of room to hit the pink area if the historical trend repeats.
Fred Krueger, another Bitcoin analyst, remains optimistic that BTC will increase if evaluated against gold prices and gold ETF flows. Krueger stated, “Bitcoin has just about doubled in price since the ETF was announced. But it did so off of a market cap of 0.7 Trillion versus 2.6 Trillion for Gold. It also suggests regardless of flows, we could do another 2x just as a “continuation.”
