Below is the historical trend of the Market Value to Realized Value (MVRV) ratio of Bitcoin, indicating whether the current bull run has ended.
The MVRV Ratio of Bitcoin may suggest the position of BTC in the current cycle.
In a recent post on X, CryptoQuant founder and CEO Ki Young Ju shared a chart demonstrating the previous pattern in Bitcoin's MVRV Ratio. The MVRV Ratio refers to a popular on-chain metric that essentially tracks the value that BTC investors hold (i.e., market capitalization) compared to the value they initially put into the asset (realized capitalization).
When the ratio's value is greater than 1, it means that investors, in general, can be considered to be in a profit state. On the other hand, if it is below that level, it implies the dominance of losses in the market.
The MVRV Ratio version shared by Young Ju is not the standard version, but a modified version called 'True MVRV'. This version only considers the data of coins participating in certain trading activities over the past seven years.
Coins older than seven years can be considered permanently lost, due to being forgotten or lost wallet keys. Therefore, True MVRV, which excludes coins that are unlikely to ever return to circulation, may provide a more accurate picture of the space compared to the standard version of the metric.
Below is a chart showing the historical trend of this Bitcoin indicator in the history of this cryptocurrency:
As shown in the chart above, Bitcoin True MVRV has risen to a relatively high level during this bull run. This implies that the average investor is realizing significant profits.
Historically, the higher the profits of holders, the more likely they are to participate in a mass sell-off motivated by profit-taking. Therefore, whenever the MVRV Ratio rises high, the likelihood of a peak for BTC is very high.
From the chart, it can be seen that the peaks in previous cycles occurred when the indicator crossed a specific line. So far, this metric has not come close to testing this level in the latest era.
According to the founder of CryptoQuant, the reason the market capitalization has not increased excessively compared to the realized capitalization is that there is still $7 billion flowing into the Bitcoin market each week.
If the current cycle shows anything similar to previous cycles, then a high but not excessively high actual MVRV may suggest there is still room for BTC in this current bull run.