The True Market Mean Price (TMMP) indicator, combined with the AVIV Ratio, represents an innovative approach to evaluating the average price of digital assets, particularly effective for Bitcoin. Unlike the Realized Price, which assesses the value of assets based on their acquisition prices, the TMMP uses a methodology that considers market dynamics and investor behavior over time.
The True Market Mean Price (TMMP) is calculated by dividing the difference between the Realized Market Cap and the Thermo Market Cap by the time-weighted active supply (Active Supply). This formula provides a measure that reflects the digital asset's average market price, considering both historical transactions and the current circulating supply.
The AVIV Ratio complements the TMMP by comparing the active market valuation with the realized valuation, highlighting significant discrepancies that may indicate investment opportunities or risks. This metric, developed to provide a deeper understanding of Bitcoin's market behavior, has proven to be a robust tool for analysts and investors seeking to understand and anticipate price trends in the cryptocurrency market.
Some important considerations: when the AVIV Ratio turns yellow or red, Bitcoin encounters resistance, signaling that investors are distributing their coins and the cycle's peak is near.
Written by joaowedson
