Analysis: Bitcoin is Undervalued, 2021 Bull Run Hasn’t Topped Yet

Bitcoin’s recent 55% drop from all-time highs may have done technical damage to the charts, but analysis strongly suggest BTC is still in a bull market.

According to on-chain analyst “Gaah Cordeiro”, BTC is still in a bull market as shown by the MVRV Onchain metric.

What is MVRV?

MVRV stands for Market Value to Realized Value. The metric divides BTC’s Market Value by its Realized Value. This creates a ratio that can show if the cryptocurrency is overvalued or undervalued. A value above 3.7 suggests that it is overvalued, and if it’s below 1 – undervalued.

According to Cordeiro, the top reached at $64k back in April was not the bull market peak because the MVRV was at 3.25 – significantly below the 2013 peaks at 5.8 and 5.9 as shown in red in the chart below.

More importantly, during the mid-cycle pullback after BTC’s first peak in 2013, the MVRV fell into the green zone around 1.7, historically a good buy zone.

Cordeiro also noted that BTC falls into bear markets when the MVRV dips into the blue zone significantly below 1.0.  This occurred after BTC peaked in 2013 and 2017.

Where is BTC now according to MVRV?

The current 55% decline from the highs has pushed the MVRV into the green zone, which historically has proven to be a good buy zone in mid-cycle pullbacks. At $29.2k, the low on July 21st, 2021, the MVRV hit a low at 1.46, within the green zone.

Since then, BTC has staged a powerful recovery up to $40.3k, driven by bullish technical momentum, soaring short liquidations, and an anticipated supply shock. The recent highs at $40.3k have pushed the MVRV up to 1.91, a sign of recovery for the largest cryptocurrency.

According to Cordeiro, as long as BTC MVRV holds the green zone and avoids falling into the blue zone, BTC remains in a bull market.