MVRV-Z Score Bottomed Out: Senior Analyst Reveals Three Major Signals for Buying the Dip

Market observers recently shared their in-depth thoughts on the current cryptocurrency market. The analyst stated that they completed their position clearing in the mid-year period and remain cautious about the market outlook. In their view, the liquidity environment this year is unlikely to improve, and their bearish stance on the market remains unchanged. However, this does not mean they will stay on the sidelines long-term; instead, they are waiting for specific conditions to be met to make precise strategic moves.

From Clearing to Waiting: Cautious Stance Amid Worsening Market Liquidity

The analyst’s decision to clear positions is not blindly pessimistic but based on their judgment of liquidity trends. They believe that the liquidity crunch facing the market this year is unlikely to reverse in the short term, making holding positions riskier than beneficial. Clearing out positions is a preparation for better opportunities when they arise, reflecting a deep understanding of market cycles typical of professional investors.

Three Key Indicators: Strict Criteria for Building Positions

The analyst has not set a vague timetable for bottom-fishing but has established three clear trigger conditions. First, there must be a significant surge in large-volume transactions in the secondary market, usually indicating panic and capitulation among market participants. Second, the MVRV-Z score—a critical on-chain indicator—must fall below zero. Currently, the score is at 0.77, still some distance from the trigger point. Third, events similar to the FTX collapse or BCH fork—“capitulation” events—must occur, as these often signal market bottoms.

The combination of these three conditions is carefully designed: large turnover reflects market sentiment, the score provides a quantitative benchmark, and black swan events indicate structural market shifts. Only when all three align can one ensure the safety and potential profitability of building positions.

Preparing for a Downturn: Market Expectations Before Full Positioning

It is noteworthy that the analyst has prepared psychologically and financially for a possible deep correction, expecting a decline of 40-50%. In their view, such a significant drop is a necessary trigger for initiating positions. Once the three conditions are fully met, they plan to adopt an aggressive full-position entry strategy to maximize the efficiency of their layout at the market bottom. This precise timing and strict condition setting demonstrate a seasoned investor’s deep understanding of indicator signals and market cues.