85% Of Altcoins In “Opportunity Zone,” Santiment Reveals
April 25 2024 - 11:00PM
NEWSBTC
The on-chain analytics firm Santiment has revealed that over 85% of
all altcoins in the sector are currently in the historical
“opportunity zone.” MVRV Would Suggest Most Altcoins Are Ready For
A Bounce In a new post on X, Santiment discussed how the altcoin
market looks based on their MVRV ratio model. The “Market Value to
Realized Value (MVRV) ratio” is a popular on-chain indicator that
compares the market cap of Bitcoin against its realized cap. The
market cap here is the usual total valuation of the asset’s
circulating supply based on the current spot price. At the same
time, the latter is an on-chain capitalization model that
calculates the asset’s value by assuming the “true” value of any
coin in circulation is the last price at which it is transferred on
the blockchain. Related Reading: Bitcoin Forms Death Cross &
TD-9 Sell Signal: Brace For Impact? Given that the last transaction
of any coin would have likely been the last time it changed hands,
the price at its time would act as its current cost basis. As such,
the realized cap essentially sums up the cost basis of every token
in the circulating supply. Therefore, one way to view the model is
as a measure of the total amount of capital the investors have put
into the asset. In contrast, the market cap measures the value
holders are carrying. Since the MVRV ratio compares these two
models, its value can tell whether Bitcoin investors hold more or
less than their total initial investment. Historically, when
investors have been in high profits, tops have become probable to
form, as the risk of profit-taking can spike in such periods. On
the other hand, a dominance of losses could lead to bottom
formations as selling pressure runs out in the market. Based on
these facts, Santiment has defined an “opportunity” and “danger”
zone model for altcoins. The chart below shows how the market
currently looks from the perspective of this MVRV model. The data
for the MVRV divergence for the various altcoins | Source:
Santiment on X Under this model, when the MVRV divergence for any
asset on some timeframe is higher than 1, the coin is considered to
be inside the bullish opportunity zone. Similarly, if it is less
than -1, it suggests it’s in the bearish danger zone. Related
Reading: Bitcoin Whales Continue Buying, Now Hold 25.16% Of All
Supply The chart shows that MVRV divergence for a large part of the
market is in the opportunity zone right now. As the analytics firm
explains, Over 85% of assets we track are in a historic opportunity
zone when calculating the market value to realized value (MVRV) of
wallets’ collective returns over 1-month, 3-month, and 6-month
cycles. Thus, if the model is to go by, now may be the time to go
around altcoin shopping. ETH Price Ethereum, the largest among the
altcoins, has observed a 3% surge over the past week, which has
taken its price to $3,150. Looks like the price of the asset has
gone up over the last few days | Source: ETHUSD on TradingView
Featured image from Shutterstock.com, Santiment.net, chart from
TradingView.com
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