On-chain data shows that the bitcoin-to-MVRV ratio recently dipped below one as the average holder has now slipped back into a losing state.
Bitcoin MVRV is now back in the historical lower region
As pointed out in a post on CryptoQuant, the BTC-MVRV ratio has now fallen back below “one” territory.
The Market Value to Realized Value Ratio (or MVRV for short) is an indicator calculated by dividing Bitcoin’s market cap by its realized cap.
The “realized cap” measures the cap of BTC by weighting each coin in circulation by the price it was last moved at (as opposed to market cap, which weights all coins by the same last BTC value).
If the value of the ratio is greater than one, it means that the average holder is making a profit right now and thus has a greater incentive to sell in the market. Particularly high readings may indicate that BTC may be overpriced at the moment.
On the other hand, metric readings below the threshold suggest that the overall market is currently losing as the realized cap is above the market cap. The lower the value, the lower the incentive for investors to sell.
Now here is a chart showing the trend of the Bitcoin-MVRV ratio over the past few years:
The value of the metric seems to have decreased in the past few days | Source: CryptoQuant
As you can see in the chart above, Bitcoin MVRV Ratio had previously escaped above the Value = 1 line, but after spending just some time above it, the metric has now plunged back into the zone.
Historically, this region has been where crypto has formed bear market bottoms in previous cycles. And a break to the upside usually meant the start of a new bull run.
Previously, some people thought that the indicator that recently left this zone means that the bear is coming to an end. However, since the indicator has turned back down, it is possible that the coin has not exited the bear market yet. It is currently unclear how much longer crypto has to stay in this region.
BTC price
At the time of writing, Bitcoin’s price is hovering around $20.7k, down 3% over the past week. Over the past month, the crypto has lost 1% in value.
It looks like BTC price has remained stuck in consolidation for the past few days | Source: BTCUSD on TradingView Featured image by Zdeněk Macháček on Unsplash.com, charts by TradingView.com, CryptoQuant.com
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