Profit-Taking Zone:
-Levels above 2 in the MVRV Ratio often indicate that many holders are sitting on significant unrealized gains. This can lead to profit-taking, as investors may see it as an opportune time to cash out, especially those who accumulated during lower MVRV levels.
- Previous instances, such as late 2021 and early 2022, saw corrections following MVRV ratios in the 2.5-3.5 range as profit-taking intensified.
Historical Peaks and Corrections:
-Historically, major market tops have sometimes occurred when the MVRV Ratio reached extreme highs, such as above 4. However, reaching 2.64 is not yet at those extremes, suggesting there might still be room for upward movement if momentum continues.
-Monitoring whether the ratio moves further towards 3+ or pulls back to a more moderate level (1.5-2) could provide signals of whether the current cycle has room to grow or if a local top might form soon.
Short-term holders (STH) have exceeded a $30 billion realized cap, reaching a level last seen in March 2024:
- If similar levels in the STH realized cap have historically led to corrections, this could be a cautionary indicator. The March 2024 level, which saw a price correction afterward, suggests that when the realized cap for short-term holders reaches a certain threshold, these holders may start to take profits, leading to selling pressure and potentially triggering a pullback.
Written by Amr Taha
