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Bitcoin MVRV ratio is declining, but still nowhere near the bottom

Bitcoin MVRV ratio is declining, but still nowhere near the bottom

The data shows that the Bitcoin MVRV ratio has been falling recently, but the value of the metric is still above the lower historical zone.

Bitcoin MVRV Ratio Sees Decline, But Value Remains Above 1

As one analyst explained in an article on CryptoQuant, BTC may still have room for further decline before the bottom is reached.

The “MVRV ratio” is an indicator that measures the ratio between the market capitalization of Bitcoin and the realized capitalization of the crypto.

Market capitalization is calculated by simply multiplying the total number of coins currently in circulation by the current price of BTC.

The realized cap is different in that instead of being multiplied by the current price, each coin is multiplied by its value when it was last sold/moved.

Coming back to the MVRV ratio, what this indicator tells us is whether or not the current crypto price is fair.

Related Reading | Bitcoin Breaks Over $30,000 Again as Coinbase Sees 38,000 BTC Outflows

When the value of this metric increases, it means that the market capitalization exceeds the realized capitalization at that time, giving investors more reason to sell the coin.

On the other hand, the decline in ratio values ​​implies that there is now a decline in the selling patterns in the Bitcoin market.

Now, here is a chart showing the trend of the BTC MVRV ratio in the history of crypto:

The value of the indicator seems to have fallen recently | Source: CryptoQuant

As you can see from the chart above, the amount in the post marked the different areas of the Bitcoin MVRV relationship.

Historically, every time the indicator has crossed a value of three, highs have been formed in the price of the coin. In this area, crypto would be highly overvalued.

Related Reading | Grayscale Hires Donald B. Verrilli in Bid to Get SEC Approval and Bitcoin ETF

On the other hand, there were dips in the area below the value of one, as the coin was highly undervalued during these periods.

Looking at the chart, it appears that while Bitcoin’s MVRV ratio has been trending down recently, the metric still has a value above one.

Following the past trend, this would suggest that the coin could still have room to decline before a bottom is found.

BTC price

At the time of writing, the price of Bitcoin is hovering around $30,100, up 1% in the last seven days. Over the last month, the cryptocurrency has lost 12% in value.

The chart below shows the trend in the value of the coin over the last five days.

It seems that the price of BTC has moved sideways in the last two days | Source: BTCUSD on TradingView Featured Image from Unsplash.com, Charts from TradingView.com, CryptoQuant.com

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