Bitcoin metrics reset and point to ‘major move’ in Q4 — Analysts

Bitcoin ( BTC ) price is trading 7% below the local high of $66,508 reached on Sept. 27, but some analysts are optimistic that this correction could just be a reset of key metrics as BTC prepares for massive gains in the last quarter of 2024.

“Bitcoin is near all-time highs, yet the valuation metrics have all declined from extreme overbought in March to around 17-75% on a 4-year Z-score,” Jamie Coutts, chief crypto analyst at Real Vision, said in an Oct. 1 post on X.

Coutts was referring to an onchain metric called the market value realized value (MVRV) Z-score, which shows the market value’s relative position to realized value, which was -116% on the three-month timeframe, -94% over a two-year period and -107% on the four-year timeframe. This suggests that Bitcoin is extremely undervalued on multiple timeframes.

The analyst also explained that Bitcoin’s open interest (OI) is high, a key metric that investors use to assess market sentiment and anticipate future price movements. The Perpetual futures OI has stood 800% higher over the last four years.

“Open interest is high in nominal and relative terms, but the funding rates are subdued.”

Bitcoin network fundamentals. Source: Jamie Coutts

“Global liquidity is accelerating to the upside,” Coutts also noted, adding that the pullback witnessed over the last six months has “removed the excess bullishness” from the market, positioning and creating the reset required for a “major move higher.” 

A report by independent analyst Lyn Alden reveals that Bitcoin price is historically correlated to global liquidity, with BTC value generally rising when liquidity expands and correcting when global liquidity shrinks.

The chart below shows that Bitcoin’s price exhibited a correlation of 0.94 with global liquidity between May 2013 and July 2024, indicating a very strong positive relationship.

BTC price vs. global M2 money supply. Source: Lyn Alden

This suggests that an uptick in global liquidity could be a prerequisite for a similar surge in the price of Bitcoin.

Related: 3 signs that Bitcoin’s Q3 close was bullish

How high can Bitcoin go in Q4?

Additional data from CoinGlass shows that Bitcoin recorded the greenest-ever September in history, closing 7.29% higher on Sept. 30. This has led to speculations among traders and analysts regarding how Bitcoin might perform during the last quarter of 2024, which is both a Bitcoin halving year and a US election year. 

Bitcoin’s performance tends to be “significantly weaker” during US election years compared to non-election years, Bitcoin analyst Timothy Peterson said in his latest analysis on X. 

Peterson attributes this weakness to increased uncertainties surrounding election outcomes, which creates market volatility and drives more cautious behavior among investors. Bitcoin reacts sharply to this uncertainty, resulting in either muted or negative returns. 

Peterson explained that Bitcoin price could, however, record more gains in November and December as investors get a clearer picture of the effects of political outcomes.

“Once election results are known and markets have a clearer picture of the political landscape, investor confidence typically returns, and the focus shifts back to broader economic and market conditions, allowing Bitcoin’s price movements to normalize across both election and non-election years.” 

Bitcoin’s performance in October. Source: Timothy Peterson

Meanwhile, fellow analyst Archie, founder of BTC Archive, believes after recording a green September, Bitcoin could continue gaining momentum during the last quarter of 2024, setting a six-figure target for BTC by the end of the year.

Bitcoin price targets for Q4/2024. Source: Archie

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.