Bitcoin Price Prediction: MVRV Indicator Suggests Potential Cycle Top, Manage Risks Cautiously

The price of Bitcoin has started to rise after a brief stagnation period, with the current trading price at $118,945, up about 1% in the past 24 hours. Analysts point out that despite the market rebound, the current cycle structure still requires vigilance for potential risk turning points, especially as the MVRV indicator suggests that Bitcoin may be nearing the cycle top.

MVRV indicator shows possible top, late August may become a key moment CryptoQuant analyst Yonsei Dent pointed out that the 365-day moving average (DMA) of the MVRV ratio is a historically useful market cycle peak signal. He pointed out that by comparing the market trends of 2021, the MVRV 365DMA formed a double top pattern at that time, and the market subsequently entered a bear market. The current cycle structure is similar to the double top pattern of 2021, which may suggest that Bitcoin will face a market top in late August or early September.

Dent also emphasized that the MVRV ratio is a lagging indicator, so the trend reversal of Bitcoin may begin in late August. He reminded market participants to strengthen risk management, stating, "Use on-chain data to guide your strategy, now is the time to tighten risk management and remain flexible."

Bitcoin liquidity indicators suggest potential market saturation In another analytical article, CryptoQuant analyst Arab Chain further assesses the current market liquidity through the Bitcoin Stablecoin Supply Ratio (SSR). SSR measures the ratio of the total market capitalization of Bitcoin to the market capitalization of all stablecoins, and it is a tool for evaluating market liquidity.

Arab Chain pointed out that stablecoins serve as a fiat currency equivalent in the market, and their supply ratio relative to Bitcoin helps measure the purchasing power in the market. If the SSR rises, it means that the supply of stablecoins in the market is less compared to Bitcoin, which may indicate that the current price rise is occurring under limited liquidity.

He further explained: "The continuous rise of SSR may indicate that future buying momentum could weaken due to insufficient liquidity." He added that unless there is a significant increase in stablecoin reserves in the coming days, Bitcoin's rebound may encounter resistance.

Conclusion: The rebound in Bitcoin prices has sparked some optimism, but indicators such as MVRV and SSR suggest that the market may be approaching a critical turning point. Investors should remain cautious and closely monitor market liquidity and risk management to avoid excessive optimism at a potential cycle top.