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Bitcoin MVRV Suggests Rally May Have More Room To Grow

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The current trend in the Bitcoin MVRV ratio suggests the ongoing rally in the cryptocurrency’s price may have room to grow further still.

Bitcoin MVRV Ratio Hasn’t Yet Reached Its 4-Year MA

As pointed out by an analyst in a CryptoQuant post, the recovery phase in the asset’s price isn’t over yet. The “Market Value to Realized Value” (MVRV) ratio is an indicator that measures the ratio between the Bitcoin market cap and realized cap.

The “realized cap” here refers to a capitalization model for BTC that measures the total cap of the asset by taking the value of each coin in the circulating supply as the price at which it was last moved on the blockchain.

This metric aims to find a “fair value” for the cryptocurrency. Since the MVRV ratio compares the market cap (that is, the normal price) with the realized cap, the indicator can provide hints about whether the asset is overvalued or undervalued currently.

When the value of the MVRV ratio is greater than one, it means the market cap is larger than the realized cap right now. Such a trend suggests that the coin may be becoming overpriced. On the other hand, values of the metric lower than this threshold imply the cryptocurrency may be undervalued currently.

Now, here is a chart that shows the trend in this Bitcoin indicator, as well as in its 4-year moving average (MA), over the last few years:

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

As shown in the above graph, the Bitcoin MVRV ratio had been below the 1 mark for much of the current cycle’s bear market, until the rally in January of this year started.

The surg

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Author: Hououin Kyouma

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