Can Bitcoin Buyers Join The Breakout Party? Analyst Says Not Yet

Bitcoin seems to have finally broken out of weeks of stagnation with an 11% rally, signaling a notable shift in its market momentum. Expectedly, this move has drawn renewed attention from various market participants who may be eager to re-enter the market.

However, an influential on-chain analyst has come out to explain why Bitcoin traders should be cautious during this phase of the cycle. According to the market pundit, the most optimal entry point might actually not be close to current price levels.

In a recent Quicktake post on the CryptoQuant platform, on-chain analyst GugaOnchain delved into the reasons why it might not be time to re-enter the Bitcoin market. The pundit began by highlighting changes in the Market Value to Realized Value (MVRV) Ratio, alongside that from the Realized Price metric.

According to GugaOnchain, the MVRV ratio currently sits above its 30-day moving average of 1.2947, indicating that Bitcoin’s recent upward price movement has gained validity. Supporting this trend, the Bitcoin Taker Buy/Sell Ratio on Binance has also shown increased buying aggression, reinforcing the notion that market participants are actively pushing prices higher.

Meanwhile, the bigger macroeconomic picture shows that the market is yet to enter an overheated phase. This is because the current MVRV reading around 1.3856 is significantly lower than the SMA-365 (known as the macro line), which stands at around 1.8620.

From a price action perspective, though, the Bitcoin price might indeed be due for a retracement. According to the market pundit, Bitcoin recently broke out of an ascending channel resistance on the daily timeframe — a move typical of bullish continuations. 

However, the Relative Strength Index (RSI) is now showing signs of strain. This is due to recent RSI readings at 67.85, which stands near the overbought region at 70. 

As such, the Bitcoin market has higher chances of a pullback in the near-term. The analyst then concluded that it would be best to buy Bitcoin “not at this resistance breakout,” but at the bottom of the retracement instead. 

In the scenario where the Bitcoin price pulls back, the crypto expert explained that this would be towards a “channel support” — specifically at levels between $70,000 and $65,000. As of this writing, the price of BTC stands at around $77,014, reflecting a 2.8% jump since the past day.