5 November 2024
The Bitcoin price action has sparked renewed interest among analysts and investors as the cryptocurrency approaches a major event (the US election) later in November.
A CryptoQuant analyst known as CoinLupin recently provided an analysis on the CryptoQuant QuickTake platform, focusing on Bitcoin’s Market Value to Realized Value (MVRV) ratio, a metric often used to gauge Bitcoin’s value compared to its on-chain fundamentals.
With macroeconomic factors creating uncertainty in the crypto markets, CoinLupin shared insights on the significance of MVRV for evaluating Bitcoin’s current market position.
MVRV And Historical Cycle Peaks
The MVRV ratio, currently around 2, indicates that Bitcoin’s market value is approximately double its on-chain realized value, reflecting the average price paid by all asset holders.
CoinLupin explained that the key lies in observing trend changes within the MVRV ratio over time rather than fixating on this absolute value.
Using the 365-day Bollinger Band for MVRV along with the 4-year average—a common reflection of Bitcoin’s cyclical trends—the analyst noted that the MVRV ratio is currently above the long-term average and recently exceeded its 365-day moving average.
According to CoinLupin, this suggests that Bitcoin’s upward trend remains intact. CoinLupin elaborated on the potential significance of Bitcoin’s MVRV levels, particularly regarding historical cycle peaks.
In previous cycles, Bitcoin has typically peaked when the MVRV ratio is between 3 and 3.6. While Bitcoin’s current MVRV of 2 does not yet approach this peak range, the upward trend in the MVRV indicates that the market may still have room for growth if historical patterns hold.
Should the Realized Value (RV) remain constant, CoinLupin’s analysis projects that Bitcoin would need a price increase of around 43% to 77% to reach an MVRV level between 3 and 3.6.
This translates to a potential price target range of $95,000 to $120,000, provided market conditions support upward momentum. However, the analyst also noted that the Realized Value could increase as new buying interest emerges, potentially pushing peak valuations beyond these estimated levels.
Bitcoin Market Performance
After several weeks and days of building momentum to surge past the $70,000 resistance, Bitcoin has again fallen below this price mark, indicating that there might not be enough momentum yet to move further to the upside.
So far, the asset has declined by nearly 1% in the past week. However, BTC currently trades for $68,306, recording a slight increase in price by 1% as its 24-hour high remains at $69,317.
Interestingly, despite the slight dip in price in the past weeks, Bitcoin’s daily trading volume has registered an increase over this period.
Particularly, data from CoinGecko shows that BTC’s 24-hour trading volume has increased from below $30 billion last Monday to currently above $38 billion as of today.
Featured image created with DALL-E, Chart from TradingView