💥💥💥 #bitcoin☀️ #MVRV Ratio At Make-Or-Break Test: Will Support Hold?
Bitcoin MVRV Ratio Retests Key Level: What It Means for BTC
On-chain data reveals that the Bitcoin Market Value to Realized Value (MVRV) ratio is currently retesting a historically significant level.
Current MVRV Ratio Analysis
The Bitcoin MVRV ratio is retesting its 365-day simple moving average (SMA), a level that has previously acted as a crucial psychological benchmark. This ratio compares the market capitalization of Bitcoin (market value) to the value investors originally paid (realized value).
- MVRV Ratio Above 1: Indicates that investors are in profit. When the ratio is significantly above 1, it often signals a potential market top as profit-taking becomes more appealing.
- MVRV Ratio Below 1: Suggests that investors are at a loss, with potential market bottoms often occurring in this range as selling pressure diminishes.
- MVRV Ratio Equal to 1: Signifies that investors are breaking even on their investments.
Historical Context
The chart of the MVRV ratio & its 365-day SMA shows that the ratio has been declining since Bitcoin's all-time high (ATH) in March, reflecting the bearish momentum that has followed. Investor profits, which were substantial during the rally, have decreased with the recent price drop, although the ratio is still around 1.8, indicating that investors remain in profit overall.
Historically, the 365-day SMA has acted as an important support level during bullish trends. If the MVRV ratio falls below this line, it could signal a transition to a bearish phase for Bitcoin.
Current Situation
Bitcoin’s price has only partially recovered from its recent decline & is currently trading around $56,900. The ongoing retest of the MVRV ratio at the 365-day SMA could be a critical factor in determining Bitcoin's near-term price direction. If the ratio holds above this level, it may suggest potential for recovery. Conversely, a drop below this level could indicate a prolonged bearish period.
Source - newsbtc.com
