The market has been experiencing constant fluctuations, and the last few months have been challenging for many Bitcoin investors. To make informed decisions for the long term, we need to understand the overall market situation.

We can use the MVRV Ratio to measure the average unrealized profit held per unit of BTC:

MVRV>1 - When this value is very high, it means that a large majority of investors are making significant gains. However, if it remains at these levels for too long, some investors may start selling.

MVRV<1 - Values well below 1 indicate selling exhaustion. This means there are significant unrealized losses, and many investors may end up capitulating. Long-term holders who are not very sensitive to price movements help establish the market's bottom, marking the beginning of a bull market.

Current scenario:

- MVRV Ratio at 1.8 reflects balanced paper gains by long-term holders (LTHs), indicating their key role in increasing the amount of BTC on the market to balance future demand.

- This level has become a strong long-term support and is an indicator of health in the early stages of a bull market.

- The market has removed the weakest holders, allowing smart money to enter during the final phase of the correction.

- The red line indicates a caution in the short term due to potential corrections. We could see the ratio levels drop to 1.7 to 1.6. However, this zone could act as a springboard for a rise in the future.

Written by Percival