One analyst has explained how a pattern forming in bitcoin's market value at realized value (MVRV) could suggest that now may be the time to buy.
bitcoin MVRV Momentum Could Reveal Buying Opportunity for btc
As analyst Ali explained in a new twitter.com/ali_charts/status/1779999876564042134″ target=”_blank” rel=”noopener nofollow”>mail On x, MVRV Momentum has been signaling buying opportunities for the cryptocurrency since the current bull run began.
The MVRV index is a popular on-chain bitcoin indicator that compares the asset's market capitalization to its realized capitalization. Realized cap refers to an asset capitalization model that, in short, tracks the actual capital that holders as a whole have used to purchase their coins.
As such, one way to look at the MVRV index is to compare the value holders have right now (i.e., the market capitalization) with what they invested in the asset (the realized capitalization).
When the indicator value is greater than 1, the market capitalization is currently greater than the realized capitalization. This trend implies that the average investor maintains profits. On the other hand, the fact that the metric is below this threshold suggests that the overall market can be assumed to be underwater.
Naturally, the fact that the MVRV ratio is exactly equal to 1 reflects the case in which investors retain as much as they put in. That is, they are simply breaking even.
In the context of the current topic, the MVRV index itself is not of interest, but its comparison with its 90-day moving average (MA) is. The chart below shows the trend in bitcoin's MVRV momentum.
<img decoding="async" class="alignnone aligncenter" src="https://technicalterrence.com/wp-content/uploads/2024/04/Bitcoin-MVRV-Suggests-Now-is-a-Good-Time-to-Buy.jpeg" alt="bitcoin MVRV Boost” width=”1199″ height=”675″/>
The two lines appear to have crossed in recent days | Source: twitter.com/ali_charts/status/1779999876564042134/photo/1" target="_blank" rel="noopener nofollow">@ali_charts on x
The chart shows that bitcoin's MVRV ratio has decreased recently. This drop is due to the drop in the price of the cryptocurrency.
With this latest drop, the metric has fallen below its 90-day moving average, meaning the indicator now has negative momentum. Since the start of this bull run a year and a half ago, the MVRV Momentum has also turned red on many occasions.
As the chart shows, the various local cryptocurrency funds in this window have generally coincided with the metric that takes these values. “When the MVRV falls below the 90-day average, it indicates a buying opportunity,” notes the analyst.
Given this pattern, the fact that bitcoin MVRV Momentum once again meets this condition may mean that it could now be an ideal entry point into the asset.
However, the fact that the MVRV ratio falls below the mark does not mean that the decline should end here. btc has often continued to fall beyond this line, but the bottom has gotten closer each time it has slipped below it.
btc Price
At the time of writing, bitcoin is trading at around $62,400, a drop of over 11% in the last week.
x/gma0vuAi/” alt=”bitcoin price chart” width=”1534″ height=”854″/>
The price of the asset appears to have witnessed some drawdown recently | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, Glassnode.com, chart from TradingView.com
<script async src="//platform.twitter.com/widgets.js” charset=”utf-8″>
