Here are three reasons why Bitcoin is poised for a recovery to $42,000

Bitcoin price suffered a fatal setback after Russia attacked Ukraine. The same effect was seen in the financial markets, including the Russian stock market. Despite this sudden downturn, BTC’s on-chain stats are showing signs of a rapid reversal.

On-chain stats reveal investor sentiment

Perhaps the most important metric is on-chain volume, as it can be used to take a closer look at investor actions. The on-chain volume for BTC peaked at 13.73 billion on February 19 to 46.38 billion on February 24.

This surge happened when the price of BTC fell from $40,122 to $34,400 over the same period. The divergence alone is enough to indicate that there was a lot of investor interest in this dip. And so it alludes to accumulation.

A similar spike in volume was seen on Feb. 7 after BTC crashed from about $57,800 to $41,600. This fractal nature of the increase in volume indicates that investors were in the process of buying the dip.

Interestingly, both bumps were well above the 200-day moving average for volume. This indicates the long-term footprint of the holders.

BTC on-chain volume chart

This optimistic outlook may appear unreliable at first glance, but the picture is supported by the 30-day Market Value to Realized Value (MVRV) model. This indicator is used to measure the average profit and loss of investors over a given time frame. A negative reading below -10% often indicates an ‘opportunity zone’ where long-term holders buy from panic-selling short-term traders.

The 30-day MVRV has seen a rise from -6.8% to $2.8% over the past three days, adding evidence that long-term holders are indeed accumulating.

BTC MVRV 30-Day Chart

A much clearer picture of the BTC market can be discerned by looking at the funding ratio chart. This indicator is used to identify market sentiment. A higher but positive reading indicates that most traders are optimistic about BTC. And a negative value often indicates that most traders want to go short.

Lately, the funding rate has been on the rise and showed no reprieve as it hit a new all-time high in early 2022. However, from a short-term perspective, the funding rate fell to -0.00071% during the crash, pointing to sentiment. of the traders. However, it is currently hovering around 0.001% revealing the bullish outlook around the king’s coin.

BTC Funding Rate Chart

While things are looking up for the price of BTC in the near term, the advantage appears to be limited to around $43,000. In addition, a move above this level seems unlikely, especially if the buyers are not behind the incoming uptrend.

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