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Cryptocurrency News Articles
Bitcoin (BTC) MVRV Momentum Has Seen A Bullish Crossover Recently, A Signal That Has Led to a 70% Rally the Last 4 Times
Oct 22, 2024 at 06:30 pm
In a new post on X, analyst Ali Martinez has discussed the recent trend in the Bitcoin Market Value to Realized Value (MVRV) Ratio.
A signal on Bitcoin that has led to at least a 70% rally the last four times has recently formed for the asset once again.
Bitcoin MVRV Momentum Has Flipped Bullish Recently
Analyst Ali Martinez recently pointed out the trend in the Bitcoin Market Value to Realized Value (MVRV) Ratio. The “MVRV Ratio” is an indicator that measures the ratio between the Bitcoin market cap and the realized cap.
The realized cap in this context is an on-chain capitalization model that calculates the total value of the asset by assuming that the true value of any token in circulation is the price at which it was last transacted on the blockchain and not the current spot price.
This last transaction price of any coin is likely to be its latest cost basis, and hence, the realized cap is a sum of the cost basis of all tokens in circulation. In another way of putting it, this model represents the capital that the investors have put into the asset.
Related Reading:
Bitcoin Investors Watch Out: Miners Showing Unusual Exchange Inflow Activity
On the other hand, the market cap, which calculates the total valuation of the total BTC supply at the current spot price, signifies the value that the investors hold right now.
When the MVRV Ratio is above 1, the investors hold more value than they put in, and thus they are in a state of net profit. In contrast, the metric being below this threshold suggests the market as a whole is carrying a loss.
Now, here is a chart that shows the trend in the Bitcoin MVRV Ratio and its 180-day moving average (MA) over the last few years:
As you can see in the above graph, the Bitcoin MVRV Ratio has surged recently as the asset’s price has undergone its recovery run, implying an improvement in investor profitability.
This surge has now led the indicator to break above the 180-day MA. Historically, a movement above this line has meant that the momentum of the metric has flipped to positive, which has been observed to be a bullish indicator for the price.
In the chart, the analyst has marked the previous rallies that followed a momentum flip in the MVRV Ratio. Interestingly, BTC seemed to have seen surges of at least 70% on each of the last four occasions.
If this precedent is anything to go by, the latest change in the MVRV Ratio momentum to green may once again lead to a surge for Bitcoin. However, it remains to be seen whether any such rally will be of a comparable scale to the previous ones or not.
BTC Price
At the time of writing, Bitcoin is trading at around $67,500, up almost 3% over the last week.
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research!
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