Bitcoin Not Yet Undervalued, Too Early to Call a Bottom, CryptoQuant Says

Bitcoin's market overheating has largely eased, but it is still difficult to view the current phase as a full bottoming process, according to a CryptoQuant analysis.

Ray, a contributor to CryptoQuant Quicktake, wrote on July 24 that Bitcoin's market-value-to-realized-value, or MVRV, ratio has fallen sharply from the cycle peak but is still trading above 1, the level typically associated with accumulation.

MVRV is an on-chain metric that compares Bitcoin's market value with its realized value to assess whether the market is overheated or undervalued. A reading below 1 is generally interpreted as meaning the market price has fallen beneath investors' average acquisition cost, placing Bitcoin in an accumulation zone.

"Bitcoin's valuation has cooled substantially, but it has not yet entered the clear undervaluation zone seen in past deep accumulation phases," Ray wrote.

He said the current market also looks different from past peak periods. MVRV remains far from distribution and high-risk territory, indicating the market is no longer overheated.

Still, caution is warranted before declaring a bottom. The fact that MVRV has yet to revisit the accumulation zone also means the latest correction cannot be confirmed as a full cycle bottom, he said.

The market is now focused on whether Bitcoin can build a base at current levels after the cooldown, or whether a further correction will push MVRV back below 1 and retest a deeper accumulation zone.