Bitcoin MVRV Lowest Since FTX Crash, Signal To Buy?
06 Agosto 2024 - 4:00AM
NEWSBTC
On-chain data shows the Bitcoin Market Value to Realized Value
(MVRV) ratio has observed a plunge alongside the latest price
crash. Bitcoin 30-Day MVRV Ratio Is Now At Lowest Levels Since FTX
Collapse As explained by analyst Ali Martinez in a new post on X,
the 30-day MVRV ratio has just gone through a sharp drop. The “MVRV
ratio” refers to a popular on-chain indicator that, in short, tells
us about how the value held by the Bitcoin investors (that is, the
market cap) compares against the capital put in by them (the
realized cap). When the value of this ratio is greater than 1, it
means the investors as a whole are carrying an unrealized profit
right now. On the other hand, it being under the mark suggests the
dominance of loss in the market. Related Reading: Bitcoin Price
Crashes To $49,000: Key Reasons Explained In the context of the
current topic, the MVRV ratio for the entire market isn’t of
interest, but that of just a segment of it: the investors who
bought their coins within the past 30 days. Now, here is a chart
that shows the trend in the 30-day Bitcoin MVRV ratio over the past
couple of years: Note that the 30-day Bitcoin MVRV ratio here is
displayed as a percentage, with the zero mark essentially taking
the same role as the 1 value in the normal version. From the graph,
it’s visible that the indicator had shot up to high levels earlier
in the year as the asset had witnessed a rapid surge to a new
all-time high (ATH). In the consolidation period that had followed
this ATH, though, the metric had fallen to oscillation about the
zero mark. This sideways trajectory, in the price and the
indicator, both, has now finally been broken, as the cryptocurrency
has observed a crash. The 30-day MVRV ratio has now slumped to
sharp negative values of 17%, meaning that the average investor who
bought in the past month is 17% in the red right now. As is
apparent in the chart, the last time that the indicator plummeted
this low was in November 2022, when the Bitcoin price crashed
following the collapse of the cryptocurrency exchange FTX. “That
period marked a bottom and an excellent buying opportunity,” notes
the analyst. Related Reading: Bitcoin RSI Goes Bearish For The
First Time Since August 2023, Will It Crash Below $40,000?
Generally, when investor profits balloon too much, a top can become
likely, as the chances of widespread profit-taking become
significant. The price ATH earlier in the year also formed when the
indicator had a high value. In times of high losses, though,
selling could be assumed to have reached a state of exhaustion,
meaning that a rebound could be probable. Bitcoin saw this in
effect during the FTX crash, but it only remains to be seen whether
a similar fate also lies in store for it this time. BTC Price The
early signs of a potential rebound may already be here as the
Bitcoin price has made recovery to $54,400 from its low under
$50,000. Featured image from Dall-E, Santiment.net, chart from
TradingView.com
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