Can there be an opportunity to buy? According to this Metric, Bitcoin (BTC) Price is Now Very Cheap!

According to an important price metric, Bitcoin (BTC), which has lost nearly 60 percent in the past three weeks, is currently trading at a relatively inexpensive price.

According to the data of crypto analytics company Glassnode, the Z-score, which shows the market value of Bitcoin (MVRV), fell below zero on Friday and started to give -0.18 as of Monday. This metric is used to describe periods when the cryptocurrency is low or overvalued.

The Z score became negative for the first time in 12 months, which means that the cryptocurrency is trading below its residual value.

While the largest cryptocurrency reached up to $ 10,500 in mid-February, it fell to $ 3,600, the lowest level of 12 months on March 13. The coronavirus triggered panic volume sales on global exchanges, which forced investors to liquidate their positions in Bitcoin, gold and the US decade.

How is Bitcoin MVRV Z-Score Calculated?

Bitcoin’s market value represents the total dollar value of the circulating supply, calculated by the daily average price on major exchanges. The actual value approaches the value paid for all existing BTCs by adding the market value of BTCs as soon as they are moved to the last blockchain.

Since the lost BTCs and long-term BTC holders (called HODLing) are also taken into account, the resulting value is close to reality. Therefore, the MVRV Z-score essentially indicates the distance or deviation from the actual value.

Historically, the MVRV Z-score (green area) has dropped below zero, while its value above 7 is the peak. For example, the metric signaled that the summit was seen for Bitcoin, which reached $ 20,000 in December 2017, after which the price had declined. In another example, the metric started signaling the bottom when Bitcoin fell below $ 6,000 on November 14, 2018, and until November 25, 2018, the price fell to $ 3,400.

The Z-score was also negative in the second half of November 2018, dropping to -0.51 until mid-December. Sales stopped around $ 3,100 in December, and after a period of consolidation, the bull market entered in April 2019.

Similarly, the 2014 market, which started at quite high levels, above $ 1,000 by the end of 2013, showed a sharp impact on the price in January 2015, with the Z-score dropping to -0.50, and Bitcoin fell to $ 150. The cryptocurrency entered a bull market in November 2015 after being consolidated for several months. So if the date is a guide, the current MVRV Z score of -0.18 indicates that the cryptocurrency can be traded near the bottom level for a while.