Bitcoin MVRV Ratio Could Hint At Where BTC Is In Current Cycle

In a new post on X, CryptoQuant founder and CEO Ki Young Ju shared a chart showcasing the past pattern in the Bitcoin MVRV Ratio.

Bitcoin (BTC) price has retraced a significant portion of its recent rally, now trading around $95,700 on Bitstamp. The world’s largest cryptocurrency began facing selling pressure near $104,000 on December 24.

After rallying by over 40% in the past two weeks, BTC seemed to be taking a breather from the bullish momentum. As the coin consolidated around $90,000, traders anticipated a potential breakout either to the upside or downside.

Bitcoin price retraced after rallying by over 40% in the past two weeks.

Bitcoin MVRV Ratio Hints At More BTC Bull Run Left?

One metric that has been used historically to gauge whether a top might be in for Bitcoin is the MVRV Ratio. This indicator, in essence, tracks how the value held by BTC investors (i.e., the market cap) compares to the value they initially put into the asset (i.e., the realized cap).

When the ratio is above 1, it can be assumed that the average investor is in a state of profit, and when it’s below the mark, it implies a dominance of loss in the market.

One version of the MVRV Ratio, which is not the common one, is the “True MVRV.” This variant accounts for the data only for the coins that were involved in any sort of transaction activity during the past seven years.

Coins that are older than seven years can be assumed to be lost forever, either due to being forgotten or having their wallet keys misplaced. Thus, the True MVRP, which excludes these coins that are unlikely to ever return back into circulation, can provide a more accurate picture of the sector than the normal version of the metric.

Now, here’s a chart that shows the trend in this Bitcoin indicator throughout the history of the cryptocurrency:

Bitcoin True MVRV has climbed to relatively high levels this bull run, showing that the average holder is sitting on substantial profits. Historically, the higher the holder gains get, the more likely they become to participate in a mass selloff in order to book profits. Thus, whenever the MVRP Ratio rises high, a top can become probable for BTC.

From the chart, we can see that the tops during the past cycles occurred when the indicator crossed a particular line. So far, the metric has not come close to retesting this level in the latest bull cycle.

According to Ki Young Ju, the founder of CryptoQuant, the reason the market cap has not overheated relative to the realized cap yet is that there is still $7 billion in capital inflows entering the Bitcoin market each week.

If the current cycle is going to show anything similar to the past cycles, then the True MVRV being high, but not extremely high, could potentially suggest more room left in the current bull run for BTC.