A CryptoQuant analyst who goes by the pseudonym “tugbachain” recently shed light on a key trend in the Bitcoin market. In his post on the CryptoQuant QuickTake platform, the analyst focused on the market value to realized value ratio (MVRV), an important metric in the Bitcoin market.
According to Tugbachain, the MVRV ratio is showing a historical downward trend. If this trend continues or is disrupted, it could have a major impact on Bitcoin.
MVRV Ratio and Its Inevitable Impact on Bitcoin
The MVRV ratio, as tugbachain explains, is a tool used to assess whether a cryptocurrency is overvalued or undervalued. This ratio is calculated by comparing the market value to the realized value of Bitcoin, which provides insight into investor behavior and market trends.
The analyst emphasized that MVRV has proven useful over the years in identifying market tops, bottoms, and notable peaks and troughs. The MVRV ratio has historically exhibited three major Bitcoin halving cycles, each marked by unique price action and investor sentiment.
The current ratio is at 1.9, with significant support at 1.75. The question raised by Tugbachain is whether reversing the downtrend could push the MVRV ratio into the 4-6 range that has historically signaled a Bitcoin peak.
The analyst wrote in his post:
The MVRV ratio is currently in a historical downtrend with significant support at 1.75. With the ratio now at 1.9, the question is: if it breaks the downtrend and reverses the downtrend, could it rise back to the 4-6 range, marking Bitcoin’s peak as seen in previous cycles?
BTC Market Performance and Technical Forecast
Bitcoin has seen increased price activity in the broader market context in recent weeks. The asset surged above $66,000 last week, sparking enthusiasm in the crypto community with hopes for a bullish October playfully dubbed “Uptober.”
However, this upward momentum was short-lived as BTC experienced a notable price correction shortly after. In the last week alone, Bitcoin is down about 7.2%, falling to a trading price of $61,496 at the time of writing.
Despite this correction, BTC has recovered slightly, posting a modest 1.9% gain over the past 24 hours. In addition to Tugbachain’s analysis, other cryptocurrency market analysts have provided additional perspectives on the impact of the MVRV ratio on BTC.
Ali, a renowned analyst on social media platform X, noted that the behavior of the MVRV ratio since May has had a noticeable impact on Bitcoin price movements.
Ali noted that every deviation of the MVRV ratio from its 90-day average has historically resulted in a significant correction in Bitcoin’s price. The latest failure has already resulted in a 10% drop, Ali said, suggesting further downward pressure is possible.
Featured image created with DALL-E, chart from TradingView