One analyst has explained how bitcoin will “likely rise to test” the $79,600 level if btc can hold above this important price model level.
The following bitcoin MVRV price band is currently valued at $79,600
in a new x.com/ali_charts/status/1797297611885457818″ target=”_blank” rel=”nofollow”>mail Over at x, analyst Ali Martinez has talked about where the next fate of btc could be based on an on-chain pricing model. The model uses the popular “Market Value to Realized Value” (MVRV) indicator.
This metric tells us how the value bitcoin investors hold right now (i.e. market cap) compares to what they put in (realized capitalization).
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When the value of this indicator is greater than 1, it means that the holders as a whole carry a value greater than their initial investment; that is, they are in net profits. On the other hand, the fact that the MVRV is below this threshold implies that the overall market is underwater right now.
There are a couple of pricing models based on this metric, but in the context of the current discussion, “MVRV extreme deviation price bands” are of interest.
The standard deviations of this model around the mean MVRV indicate the relevant price levels. Below is a chart showing what these levels currently look like for bitcoin.
As the chart shows, bitcoin is currently trading above the +0.5σ price band. At the price level corresponding to this 0.5σ level ($66,800 at the moment), btc's MVRV value becomes 0.5 standard deviations above its mean value.
According to this model, the next level of interest is +1σ, where the MVRV is 1 standard deviation above its mean. The price level at which the MVRV ratio would satisfy this condition is $79,600.
Historically, highs in the cryptocurrency have tended to form when the price breaks above this MVRV price band level. On the chart, you can see that btc surpassed this level earlier in the year when it set its new all-time high, which remains the peak of the rally so far.
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Ali suggests that if bitcoin can continue to hold above $66,800 (the +0.5σ price band level), the asset “will likely rise to test the 1.0σ price band at $79,600.” A possible rally to this level would imply an increase of more than 14% for btc from its current price.
Why are highs more likely to occur above the +1σ MVRV price band? The reason could lie in the fact that when the MVRV reaches such high values, investors make considerable profits, making them more likely to engage in a sell-off.
btc Price
bitcoin witnessed a retest of the +0.5σ price band earlier, but the level has held until now as the coin has since recovered to $69,500.
Featured image by Dall-E, Glassnode.com, TradingView.com chart
