22 August 2024
On-chain data shows the Bitcoin Market Value to Realized Value (MVRV) Ratio has recently been nearing in on a death cross formation.
Bitcoin 30-Day MA MVRV Ratio May Be About To Cross Under 365-Day MA
As explained by an analyst in a CryptoQuant Quicktake post, the MVRV Ratio is at risk of going through a death cross. The “MVRV Ratio” is a popular Bitcoin on-chain indicator that, in short, keeps track of how the value held by the investors (that is, the market cap) compares against the value put in by them (the realized cap).
When the value of this metric is greater than 1, it means the investors as a whole are in a state of net profit right now. On the other hand, it being under this threshold suggests the dominance of loss in the market.
Naturally, the MVRV Ratio being exactly equal to 1 implies the BTC holders are carrying exactly as much value as they initially put in, so they are just breaking-even.
Now, here is a chart that shows the trend in the Bitcoin MVRV Ratio, as well as its 30-day and 90-day moving averages (MAs), over the past few years:
As displayed in the above graph, the Bitcoin MVRV Ratio had shot up to pretty high levels back in March when the cryptocurrency’s price had rallied to a new all-time high (ATH).
But as investors have taken their profits and sold during the long consolidation phase that has followed since then, the indicator has gone down. That said, the indicator is still at a value of 1.88, which indicates the market cap is nearly twice the realized cap. Thus, the investors should still be quite comfortable.
What can be concerning, however, is the speed at which the drawdown in the MVRV Ratio has occurred. From the chart, it’s visible that the 30-day MA of the metric has gone through a steep drop and is now retesting the 365-day MA.
Historically, the 30-day MA of the MVRV Ratio crossing below the 365-day MA has usually led to a bearish phase for the cryptocurrency. Such a death cross last occurred near the end of 2021, foreshadowing the bear market that would follow in 2022.
At present, the death cross in these MAs of the Bitcoin MVRV Ratio is yet to confirm, so the indicator can be to monitor in the near future. In the scenario that the 30-day MA continues in this trajectory and falls below the 365-day MA, BTC could end up witnessing another period with bears at the helm.
There is also the possibility, however, that the indicator turns itself around and the death cross formation doesn’t actually end up taking shape.
BTC Price
Bitcoin had broken past the $61,000 level yesterday, but it would appear that the surge couldn’t last as the asset has already come down to $59,400.