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Bitcoin's current ratio MVRV is retesting its 365-day simple moving average (SMA), an important psychological level. The MVRV ratio, an on-chain indicator, compares Bitcoin's market value to its realized value, showing whether investors are in a profit or a loss. A value greater than 1 means that investors are in profit, while a value less than 1 indicates losses. When the ratio is exactly 1, investors are in a break-even state.
Since the all-time high (ATH) in March, the MVRV ratio has been declining due to bearish market momentum. Despite this, the current value is around 1.8, which indicates that investors are still in profit. Historically, the 365-day SMA has served as an important support level during uptrends. When the MVRV ratio crosses below this line, it often indicates a shift toward a downtrend.
This test of the 365-day SMA is important for Bitcoin. If this support is maintained, Bitcoin may avoid a prolonged bearish period. However, if the ratio falls below this SMA, it may indicate a prolonged downtrend. Currently, Bitcoin is trading at around $56,900, showing only a slight recovery from its recent collapse.
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