The Bitcoin MVRV ratio, an on-chain indicator, suggests that the asset’s current rally may not have reached its peak yet.
Bitcoin MVRV Ratio Indicates Market Not Overheated
According to data from IntoTheBlock, past bull markets peaked when the MVRV ratio exceeded 300%. The MVRV ratio compares the Bitcoin market cap to the realized cap, which is a capitalization model based on the assumption that each coin is worth its last movement price, rather than the current spot price. The realized cap represents the total capital invested by all investors.
The MVRV ratio reveals whether investors are holding more or less than their initial investment. A chart depicting the trend in the Bitcoin MVRV ratio over the past few years shows an upward trajectory.
Looks like the value of the metric has been going up in recent days | Source: IntoTheBlock on X
At the 100% mark, the two capitalization models align, indicating a break-even point for the market. Above this threshold, investors hold a net profit, while below they hold a net loss. The BTC MVRV ratio has remained above break-even in recent months, correlating with the asset’s price rally.
Currently, the MVRV ratio hovers around 150%, implying that the market cap exceeds the realized cap by 50%. Based on historical patterns, when investors’ profits accumulate, they are more likely to participate in a selloff. However, IntoTheBlock notes that previous bull markets typically peaked when the MVRV ratio surpassed 300%, suggesting that there is still some distance until reaching that threshold.
This indicates that the Bitcoin rally may not have overheated yet and there could be further bullish momentum for the cryptocurrency’s price.
In the past week, the Bitcoin rally has paused, with the price trading around $34,500.
The value of BTC appears to have gone stale in the last few days | Source: BTCUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com, IntoTheBlock.com