BTC_MVRV trade ideas
Bitcoin MVRV AnalysisHello friends,
Thanks to the collaboration between TradingView and IntoTheBlock, you can access this data for free on TradingView with the code "BTC_MVRV."
Today, we will dive deep into MVRV, the primary data I use for trend tracking in Bitcoin.
What is MVRV?
MVRV is calculated by comparing two main metrics: market value and realized value.
Market value is determined by multiplying the current market price of a cryptocurrency by its circulating supply. On the other hand, realized value considers the total value of all coins based on their last transaction prices.
The Market Value to Realized Value Ratio (MVRV) allows us to understand the profitability of Bitcoin investors and cyclically track trends.
Bull vs. Bear
If the Bitcoin MVRV ratio is above 1, it indicates that investors are in profit, while if it is below 1 investors are at a loss.
Generally, investors pay attention to the following two levels when examining MVRV. If the MVRV is below 1 the Bitcoin price is cold as the polar north, and if the MVRV is at or above 3.7, the Bitcoin price is hot as Sahara desert.
However, to add a different perspective and to detail trend tracking, I included the 52-week simple moving average. As you can see on the chart, it has become much easier to follow bear and bull trends. We can say that if the MVRV score is above the 52-week average, the bulls are strong; if it is below, the bears are strong.
Conclusion
Currently, the MVRV is at 2.03 points, while its 52-week average is at 1.88 points.
This situation shows us that we are still in a bull trend. As a bonus, when we examine the MVRV historically, we can observe that 2.00 points is an important level. We have witnessed that the momentum in bull trends increases if the MVRV can stay above 2.00 points.
Let's see what we will witness in the current bull trend.
Thank you for reading.
Bitcoin MVRV - A Key Indicator to WatchThis indicator measures the ratio of Bitcoin's market capitalization to the average purchasing cost of each address holding the asset.
In short; it provides insight into the profitability of the average investor. A higher ratio suggests that the current market value of the asset significantly exceeds the average purchase cost, indicating that most holders are in profit. Conversely, a lower ratio may suggest that many holders are at a loss.
Historically, high values between 3.5 and 5 have coincided with peaks in the markets. The current value is 2.56. This indicates that although CRYPTOCAP:BTC is approaching a heated territory, it's not yet at peak levels.
One important trend to observe is that the MVRV peak has declined in every major Bitcoin cycle. It is reasonable to expect this trend to continue, and key levels to watch would be in the 3 to 3.4 range.
