This is the lowest VG level since 15th December 2020, the day we before we broke the prior ATH decisively. This means that relatively, the market is less overvalued than any time in the last 4+ months. Of course, as we have mentioned several times, dips under 7 are relatively common and present the best buying opportunities within bull markets. For example, the last time we had a VG of 6.87 was when BTC was $31,000 on January 21st — this indeed marked the local bottom and we haven’t seen that price since. In 2017, we had wicks as low as into the 5s. The key factor to look out for is how quickly we can recover back to VG ~7. If we are in the 5s and low 6s for a sustained period of time — over a week — then we’ll certainly have to reassess how things are playing out as that could signal a pause or end for the bull market.
As it currently stands, though, we’ll have to assume we’re continuing our ~2 month long consolidation between VG ~7 and VG ~8. We saw some wicks above VG ~8 when we first hit $60K in March, now we’re potentially seeing some wicks below VG ~7. Remember: while bull markets do conclude with VG heading under 7 for a sustained period of time, it’s also important to remember they typically end with high volatility — not the type of textbook VG consolidation we’ve seen over the last couple of months. This is why, we have to lean towards this being a continuation of the bull market. But as mentioned above, we’ll continue assessing the situation as it develops.