• Bitcoin’s 43% hike in January brought positive sentiment to investors.
• On-chain data revealed that it might not be easy to find guaranteed buying opportunities in February.
• Market Value to Realized Value (MVRV) ratio and Net Unrealized Profit/Loss (NUPL) are important metrics which need to be monitored to gauge the current state of Bitcoin.
Bitcoin’s [BTC] performance in January brought some much-needed positive sentiment to investors who were feeling the effects of a dampened market in 2022. The coin’s 43% hike was one of the best first month performances of the coin in about 10 years, but there are signs that it might be difficult to replicate that success in February.
On-chain data has revealed that investors looking to accumulate more of the cryptocurrency might struggle to find guaranteed buying opportunities this month. The Market Value to Realized Value (MVRV) ratio and Net Unrealized Profit/Loss (NUPL) are two key metrics which need to be monitored to gauge the current state of Bitcoin.
The MVRV ratio displays possible buying prospects due to the market capitalization and realized capitalization trend. At the time of writing, the MVRV ratio was 1.16, which according to On-chain Edge, a pseudonymous CryptoQuant analyst, could signify a shaky position and not necessarily one to potentially make significant gains.
The NUPL is centered on the market cap and realized cap difference and whether the Bitcoin network is in profit or loss. The NUPL value is currently at 0.14, higher than before the FTX crash, but this is still not enough to push it into a strong accumulation zone.
The UTXO of Bitcoin also needs to break out of its resistance to sustain January’s momentum and U.S interest rates could also affect demand for the king coin.
Overall, it appears that investors might need to be extra vigilant when it comes to buying Bitcoin in February, as it is not likely to be a replica of the January performance.