4 reasons it will recover and hit ATH

The Bitcoin price fell sharply a few days after rising to a record high and entered a technical correction.

Bitcoin (BTC), which started the week with a record rise of $ 108,250, erased most of the gains it made this month. It entered a local correction, falling 13% from its year-to-date high. Here are four possible reasons why Bitcoin prices could bounce back and retest all-time highs:

Bitcoin price corrections are not new

The first main reason for the BTC price recovery is that the ongoing decline we predicted is not new. Bitcoin often pulls back sharply after rising to a critical resistance level.

The long-term chart below shows Bitcoin jumping to $19,778 in December 2017 and then reversing by 84%. It then fell 55% after reaching $64,647 in April 2021. Bitcoin last rose as high as $73,885 in March before falling 33% by August.

This decline will likely be followed by a strong recovery because BTC still has strong fundamentals. While mining production has decreased since the last halving event, the amount of Bitcoin on exchanges has continued to decline. Similarly, spot Bitcoin ETFs attracted over $34 billion in assets; This trend is expected to continue, especially by institutional investors.

Bitcoin price chart | Source: crypto.news Bitcoin’s MVRV score is still low

Another reason why Bitcoin prices are recovering is that the popular market cap relative to the realized value point is still lower than historical corrections. The MVRV-Z score is calculated by subtracting the realized market value from the circulating market value and then dividing by the standard deviation.

According to CoinGlass, Bitcoin’s MVRV score rose to 2.89 earlier this week. Bitcoin received 3.05 points in the bear market in March this year. It also received 3.21 points in the correction in January 2022 and 5.25 points in March 2021. This suggests that the coin has further upside potential once panic selling subsides.

Bitcoin MVRV score | Source: CoinGlass Bitcoin whale accumulation continues

Large Bitcoin holders are still accumulating money and hopes for strategic reserves are rising. MicroStrategy added more BTC to its portfolio and now holds more than 439,000 tokens. The largest Bitcoin miner, Marathon Digital, has more than 44,300 coins, while Riot Platforms and Hut 8 Mining have also added thousands of coins.

More companies are likely to purchase Bitcoin after observing the success of MicroStrategy. Over the past four years, MicroStrategy has grown from a startup technology company to an $80 billion firm.

Additionally, Donald Trump’s discussions about creating a strategic Bitcoin reserve have also attracted attention. In a recent note, Bitwise noted that more countries may follow suit as US public debt rises above $36.4 trillion.

BTC price chart with Bitcoin price bullish techniques | Source: crypto.news

Finally, Bitcoin price has formed strong bullish technical patterns from a broader perspective. The weekly chart shows the coin forming a cup pattern between 2021 and March this year. It then gained a foothold between March and October, followed by a strong comeback.

Bitcoin has rebounded in most weeks since then, and it is generally normal for an asset in an uptrend to pause temporarily. Bitcoin’s target in this bull run is $122,000, with the depth of the cup measured at 76%. Adding 76% to the top of the cup yields a target of $122,000.