Bitcoin MVRV Ratio Archives

25th March 2024

Bitcoin Top In Yet? What The Legendary MVRV Ratio Says

Here’s what the latest trend in the Bitcoin Market Value to Realized Value (MVRV) ratio suggests about where the market is currently in terms of a top.

Bitcoin MVRV Ratio Has Seen A Decline To The 2.34 Level

According to data from the market intelligence platform IntoTheBlock, the BTC MVRV ratio surged high earlier this year as the cryptocurrency rally took place.

The “MVRV ratio” is a popular indicator that tracks the ratio between the Bitcoin market cap and the realized cap. The former is simply the total valuation of the asset’s supply at the current spot price, while the latter is an on-chain capitalization model.

The realized cap measures the total sum of the value of the cryptocurrency’s supply, assuming that each coin in circulation has its true value at the price at which it was last transferred on the blockchain rather than the current spot value.

One way to interpret the realized cap is that since it takes into account the buying price of every token in circulation (assuming that the last transaction of every token was indeed the point at which it last changed hands), it essentially sums up the total capital the investors have invested in the asset.

As such, the MVRV ratio tells us how the total value that Bitcoin investors are carrying right now (that is, the market cap) compares against the value they put in (the realized cap).

Now, here is a chart that shows the trend in the Bitcoin MVRV ratio over the past few years:

Bitcoin MVRV ratio

As is visible in the graph, the Bitcoin MVRV ratio has had a value greater than 1 for a while now. When the indicator has such values, the market cap is greater than the realized cap, and hence, the investors carry net profits.

With the latest rally in the asset, this indicator has surged to relatively high levels, a natural consequence of the holders’ profits ballooning up with the price surge.

After the recent drawdown in the price, though, the MVRV ratio has also turned itself around, as it’s now heading down. At present, the ratio has a value of around 2.34.

“Traditionally, an MVRV ratio above 3 has been a reliable marker for predicting price peaks,” notes IntoTheBlock. So far, in the current rally, the metric hasn’t crossed this mark. It did come close recently, but the latest decline has meant it has gained a bit more distance to the level.

Why have tops historically occurred at high values of the Bitcoin MVRV ratio? The answer is that investors in profits are more likely to participate in selling, and this temptation to take profits only increases as their gains grow larger.

Because of this, selloffs are most probable when the market is holding extreme levels of profits, which is exactly what high MVRV ratio values reflect.

BTC Price

At the time of writing, Bitcoin is trading at around $67,200, up 3% over the past 24 hours.

Bitcoin Price Chart

29th February 2024

Bitcoin MVRV Hits Levels That Lead To Parabolic Bull Run In 2020

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.

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:

Bitcoin MVRV ratio

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%.

“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.

Bitcoin Price Chart

6th December 2023

Is Bitcoin Overvalued Yet? What Historical Data Suggests

Here’s what the data of this historical on-chain indicator suggests regarding whether Bitcoin has become overvalued after its latest uptrend.

Bitcoin MVRV Z-Score Hasn’t Climbed Too High Yet

As the Reflexivity Research co-founder pointed out in a post on X, the BTC MVRV Z-Score readings have heated up little compared to the values observed in past bull runs.

The “Market Value to Realized Value (MVRV) ratio” is an indicator that measures the ratio between the Bitcoin market cap and the realized cap. The “realized cap” refers to a capitalization model for the cryptocurrency that assumes the “true” value of any coin in circulation is the price at which it was last transacted on the blockchain.

Since the last transaction price of any coin was likely the price at which it changed hands, one way to interpret the realized cap is that it represents the total capital the holders have invested into the asset.

Since the MVRV ratio compares the market cap (the spot price) against this model, it can tell us whether the investors are holding more value than they put in right now.

If the investors are holding more than what they bought the coin for (that is, they are in net profits), they might be tempted to sell, and thus, BTC might be likely to see a correction. Similarly, the market being in losses can suggest the cryptocurrency’s price is currently undervalued and might be due to a rebound.

Now, here is a chart that shows the trend in the Z-Score of the Bitcoin MVRV ratio over the history of the coin:

Bitcoin MVRV Z-Score

The “Z-Score” is a statistical tool used to measure how far a data point is from the mean. In the graph, the analyst has marked two zones for the Bitcoin MVRV Z-Score where BTC has attained an overbought/underbought condition.

It would appear that historical bottoms in the asset’s price have formed when the metric has dipped inside the green zone. The tops haven’t been so simple, though, as they fluctuate a bit.

One common thing between all tops is that they have occurred at decently high values of the indicator. At such values, the investors make very high profits, so tops naturally become significantly probable.

The chart shows that the Bitcoin MVRV Z-Score has been climbing recently as the asset has rallied, but it’s yet to arrive at levels similar to past tops. “There will be corrections along the way, but zooming out Bitcoin is far from overvalued based on historical readings,” notes the analyst.

BTC Price

At the time of writing, Bitcoin is trading at around $43,800, up 15% in the last week.

Bitcoin Price Chart

30th October 2023

Is Bitcoin Top Here? This Metric Would Say Otherwise

The Bitcoin MVRV ratio, an on-chain indicator, could suggest the asset may not have hit its top for the current rally just yet.

Bitcoin MVRV Ratio Says Market Isn’t Overheated Right Now

According to data from the market intelligence platform IntoTheBlock, past bull markets hit their peaks when the MVRV ratio crossed the 300% mark. The “Market Value to Realized Value (MVRV) ratio” refers to an indicator that keeps track of the ratio between the Bitcoin market cap and realized cap.

The “realized cap” here is a capitalization model for BTC that calculates the total value of the cryptocurrency by assuming that each coin in circulation is worth the same as the price at which it was last moved, rather than the current spot price.

As the price at which a coin was last moved on the blockchain was likely the price at which it changed hands, the realized cap can be interpreted as the total amount of capital that the investors as a whole have put into the asset.

The MVRV ratio compares the price of the coin (the market cap) with the realized cap, so it can tell us whether the investors are holding more or less than they put in.

Now, here is a chart that shows the trend in the Bitcoin MVRV ratio over the last few years:

Bitcoin MVRV Ratio

In the above graph, the Bitcoin MVRV ratio is shown as a percentage. At the 100% mark, the two capitalization models approach a equal value, suggesting that the market as a whole is just breaking-even.

Above this threshold, the investors are holding a net amount of profit, while below they are carrying loss. From the chart, it’s visible that the BTC MVRV ratio has remained above the break-even in recent months as the asset’s price has observed a rally.

At present, the metric is floating about the 150% level, suggesting that the market cap is 50% more than the realized cap. Historically, the larger the investors’ profits have gotten, the more likely they have become to take part in a selloff.

Because of this reason, tops have generally formed when the MVRV ratio has hit high levels. IntoTheBlock notes, however, that the bull markets in the past have usually only hit their peaks when the indicator has crossed the 300% mark.

Clearly, the indicator is still a significant distance away from this mark at the moment. This could be a potential sign that the Bitcoin rally hasn’t reached a state of overheat yet and thus, there might be more to come for the cryptocurrency’s price in terms of bullish momentum.

BTC Price

The Bitcoin rally has hit the pause button in the past week as the asset’s price has taken to sideways movement. Currently, the coin is trading around the $34,500 mark.

Bitcoin Price Chart

22nd December 2022

Bitcoin Correction Soon? MVRV Triple Ribbon Approaches Bearish Cross

On-chain data shows the Bitcoin MVRV Ratio Triple Ribbon is approaching a bearish cross, a sign that a correction could be coming soon for the crypto’s price.

Bitcoin MVRV Ratio Triple Ribbon Is Close To Bearish Crossover

As pointed out by an analyst in a CryptoQuant post, the MVRV ratio warns that a new round of decline may be coming for BTC. The “MVRV ratio” is an indicator that measures the ratio between the market cap of Bitcoin and its realized cap. The realized cap is a capitalization model for BTC that calculates a sort of “real value” for the asset by assuming that the true worth of each coin in circulation is the price at which the particular coin was last moved.

By comparing this realized cap with the market cap, the indicator tells us whether the coin’s actual price is fair or not right now. Here is a chart that shows the trend in three moving averages (10-day, 15-day, and 20-day) of this metric over the last few months:

These three MAs of the Bitcoin MVRV Ratio together form the “Triple Ribbon” indicator, and crossovers between these ribbons have historically had implications for the price of the asset. As you can see in the above graph, whenever the 10-day MA has passed below both the 15-day and the 20-day versions, while at the same time the 20-day has gone above both the others (thus keeping the 15-day’s position unchanged in the middle), a bearish crossover has formed for BTC.

There have been two instances of such a cross during the last few months; the first one occurred back in August when Bitcoin was at the height of its first relief rally of this bear market, while the other one formed in November right as the FTX crash came around. In both of these occurrences, BTC’s price took a deep plunge following the cross formation.

From the chart, it’s apparent that the MVRV Ratio Triple Ribbon has once again been approaching this same kind of bearish crossover recently. If these MAs continue in this trajectory and the cross does end up happening, then it might mean the crypto will see another sharp drop soon.

BTC Price

At the time of writing, Bitcoin’s price floats around $16,800, down 5% in the last week.

6th December 2022

Bitcoin Now Undervalued For 170 Days, How Does This Compare With Previous Bears?

On-chain data shows Bitcoin has been undervalued for 170 days now, here’s how this figure compares with that during the previous bear markets.

Bitcoin MVRV Ratio Has Been Stuck Under ‘1’ Since 170 Days Ago

As pointed out by an analyst in a CryptoQuant post, the lowest point that the MVRV ratio has gone in this bear so far is 0.74.

The “MVRV ratio” is an indicator that measures the ratio between Bitcoin’s market cap and its realized cap.

Here, the “realized cap” is a BTC capitalization model where each circulating coin’s value is taken as the price at which it was last moved/sold. All these values are then summed up for the entire supply to get the worth of BTC.

This is unlike the normal market cap, where all the coins are given the same value as the current Bitcoin price. The usefulness of the realized cap is that it acts as a sort of “real value” for the crypto as it takes into account the cost-basis of each holder in the market.

Thus, a comparison between the two caps (which is what the MVRV ratio is) can tell us whether the current BTC price is undervalued or overvalued right now.

The below chart shows the trend in the Bitcoin MVRV ratio over the last several years:

The value of the metric seems to have been below one in recent days | Source: CryptoQuant

As you can see in the above graph, the Bitcoin MVRV ratio has been under a value of 1 during the last few months, which means the market cap has been below the realized cap.

Historically, the region below 1 is where bear bottoms in the price of the crypto have been observed. On the other hand, the ratio being greater than 3.7 is when tops have been seen.

In the 2014-15 bear market, the indicator assumed values lower than 1 for 300 days, and went down to as low as 0.6 during this streak.

The 2018-19 bear saw a shorter cycle, however, as it was in this zone for only 134 days. Its lowest point, 0.69, was also not as deep as in 2014-15.

In the current Bitcoin cycle, the metric has spent 170 days in this region so far, registering a low of 0.74.

The MVRV ratio has therefore now been longer in this region than during the last cycle, but it’s still not near the length seen in 2014-15.

The metric’s depth is also not as much as in either of the cycle, so it’s possible the bear will go deeper still, before Bitcoin finds the bottom of this cycle.