Bitcoin MVRV Ratio Has Seen A Decline To The 2.34 Level
According to data from the market intelligence platform , the BTC MVRV ratio surged high earlier this year as the cryptocurrency rally took place.The “MVRV ratio” is a popular indicator that tracks the ratio between the Bitcoin market cap and the realized cap. The former is simply the total valuation of the asset’s supply at the current spot price, while the latter is an on-chain capitalization model.
Looks like the value of the metric has been turning down in recent days | Source:As is visible in the graph, the Bitcoin MVRV ratio has had a value greater than 1 for a while now. When the indicator has such values, the market cap is greater than the realized cap, and hence, the investors carry net profits.
With the latest rally in the asset, this indicator has surged to relatively high levels, a natural consequence of the holders’ profits ballooning up with the price surge.
After the recent drawdown in the price, though, the MVRV ratio has also turned itself around, as it’s now heading down. At present, the ratio has a value of around 2.34. “Traditionally, an MVRV ratio above 3 has been a reliable marker for predicting price peaks,” notes IntoTheBlock. So far, in the current rally, the metric hasn’t crossed this mark. It did come close recently, but the latest decline has meant it has gained a bit more distance to the level. Why have tops historically occurred at high values of the Bitcoin MVRV ratio? The answer is that investors in profits are more likely to participate in selling, and this temptation to take profits only increases as their gains grow larger. Because of this, selloffs are most probable when the market is holding extreme levels of profits, which is exactly what high MVRV ratio values reflect.BTC Price
At the time of writing, Bitcoin is trading at around $67,200, up 3% over the past 24 hours.The price of the asset appears to have rebounded over the last few days | Source: