2 on-chain metrics suggest Bitcoin is at its ‘best moment to buy’

Bitcoin appears to be entering the popular buying zone, according to two well-liked indicators that cryptocurrency analysts use to monitor on-chain trade activity. The open interest (OI) weighted financing rate measures and the market value to realized value (MVRV) show that Bitcoin is currently at a favorable entry point for traders. In an April 23 post, well-known pseudonymous trader Mister Crypto claimed that this is the ideal time to purchase Bitcoin.

Based on CoinGlass data, the cost of holding Bitcoin futures positions, measured by the OI-weighted funding rate, crossed into positive territory on April 24 after spending a day in the negative zone, with a posting of 0.0093%. Even with the increase, it is still much smaller than the 0.0714% correction that saw at the start of April, which analysts believe was beneficial for the market.

Bitcoin Financing Rates as Market Predictors

Higher funding rates indicate a rise in interest in long trades and also suggest a more optimistic outlook for the market. Early in March, when Bitcoin’s OI-weighted financing rate previously peaked, the cryptocurrency hit an all-time high of $69,200 on the same day. A week later, on March 14, it reached $73,835 again surpassing that milestone, according to CoinMarketCap data. 

Charles Edwards, the fund founder of Capriole Investments, told Cointelegraph that although financing rates are a solid predictor “broadly speaking,” there is no longer the same level of assurance as there was a few years ago.

“2018 through 2020 and 2021, that sort of three-year window, it wasn’t talked about much. It wasn’t understood, and it was a hundred percent hit rate metric, where if it went negative, it was almost a hundred percent guaranteed; if you went long, you would make money.”

In the meantime, it appears that Bitcoin has moved into even better purchasing conditions according to the MVRV indicator, which seeks to determine whether Bitcoin is overvalued or undervalued with its fair value.

According to data from LookIntoBitcoin, as of the time of publication, Bitcoin’s MVRV score is 2.32, down 6.45% from the beginning of April. If the market’s MVRV score is greater than 3.5, it implies that it is nearly at its peak; if it is less than one, it is at its lowest point.