Bitcoin MVRV Hits Levels That Lead To Parabolic Bull Run In 2020
February 29 2024 - 8:00AM
NEWSBTC
On-chain data shows the Bitcoin MVRV ratio is currently at the same
high levels as those that led to the parabolic bull run back in
2020. Bitcoin MVRV Ratio Has Shot Up As Latest Rally Has Occurred
As pointed out by CryptoQuant founder and CEO Ki Young Ju in a post
on X, the MVRV ratio has just hit a value of 2.5. The “Market Value
to Realized Value (MVRV) ratio” is a popular on-chain indicator
that keeps track of the ratio between the Bitcoin market cap and
the realized cap. The “realized cap” here refers to a
capitalization model for BTC that assumes that the real value of
any token in circulation is not its current spot price (as the
market cap takes it to be), but rather the value at which the coin
was last transferred on the network. Related Reading: TRON Hits 95
Million Addresses Milestone, Will This Help Price? The previous
transaction for any coin may be considered the last time it changed
hands, which implies that the price at the time would be its
current cost basis. As such, the realized cap adds up the cost
basis of every token in circulation. This means that the realized
cap essentially keeps track of the total amount of capital that the
investors have used to purchase their Bitcoin. Since the MVRV ratio
compares the market cap (that is, the value the investors are
holding right now) against this initial investment, its value can
tell us about the amount of profit or loss the investors as a whole
are currently carrying. Now, here is a chart that shows the trend
in the Bitcoin MVRV ratio over the history of the cryptocurrency:
Looks like the value of the metric has been shooting up in recent
days | Source: @ki_young_ju on X As is visible in the graph, the
Bitcoin MVRV ratio has rapidly climbed up as the asset’s price has
gone through its latest rally. In this surge, the metric has
managed to exceed the 2.5 level. When the ratio is greater than 1,
it means that the market cap is higher than the realized cap right
now, and thus, the overall market is holding its coins at some
profit. A value of 2.5 implies the average wallet is currently
carrying gains of 150%. Related Reading: Cardano (ADA) Among Only
Coins Seeing Loss-Taking: What It Means “In Nov 2020, MVRV was 2.5
at $18K, preceding the all-time high and parabolic bull run,”
explains Ju. Back in that bull run, the peak of the first half of
2021 wasn’t hit until the MVRV ratio crossed the 3.7 mark, just
like the two bull runs preceding it. The top in November 2021,
however, didn’t follow this pattern, as it formed close to the 3.0
level. It now remains to be seen which path Bitcoin would take in
its current rally, if it is at all similar to either of these. BTC
Price Following Bitcoin’s impressive 22% rally over the past week,
the asset’s price is now trading around the $62,800 level, not very
far from setting a new all-time high now. The price of the asset
has gone through rapid growth over the past few days | Source:
BTCUSD on TradingView Featured image from Kanchanara on
Unsplash.com, CryptoQuant.com, chart from TradingView.com
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