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85% Of Altcoins In "Opportunity Zone," Santiment Says
Santiment found that over 85% of altcoins are in the historical “opportunity zone.”
MVRV Suggests Most Altcoins Should Bounce
Santiment analyzed the cryptocurrency market using their MVRV ratio methodology in a recent X article. A common on-chain indicator is the “Market Value to Realized Value (MVRV) ratio” which compares Bitcoin's market cap to its realized cap.
A typical market cap is the asset's circulating supply valued at the spot price. Meanwhile, the latter is an on-chain capitalization model that determines asset value by assuming the “true” value of each currency in circulation is the latest blockchain transfer price.
Since a coin's last transaction was likely its last, its current cost basis is its previous price. The realized cap is the cost foundation of every token in circulation.
The model may be seen as a measure of investors' total money invested in the asset. In contrast, market cap measures holders' worth.
Since the MVRV ratio compares these two models, it may indicate if Bitcoin investors own more or less than their original investment.
Tops are more likely to develop when investors are making big gains because profit-taking might rise. A majority of losses might lead to market bottoms as selling pressure fades.
Santiment created an altcoin “opportunity” and “danger” zone model based on these factors. From this MVRV model, the market looks like this chart below.
Bitcoin MVRV
This model places coins in the bullish opportunity zone when their MVRV divergence is greater than 1. The bearish danger zone is indicated by a value below -1.
MVRV divergence for most of the market is in the opportunity zone, according to the chart. The analytics company says,
The market value to realized value (MVRV) of wallets' aggregate returns across 1-month, 3-month, and 6-month cycles show that over 85% of assets we monitor are in a historic opportunity zone.
According to the model, this may be a good moment to buy altcoins.
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