On-chain data shows that bitcoin’s market value to realized value (MVRV) ratio has fallen sharply with the recent price crash.
Bitcoin’s 30-day MVRV is now at its lowest level since the FTX collapse
As analyst Ali Martinez explained in a novel article fasting on X, the 30-day MVRV indicator just went through a keen decline. “MVRV indicator” refers to a popular chain indicator that basically tells us how much value Bitcoin investors have (i.e. market capitalization) compares to the capital they put in (realized capital).
When the value of this indicator is greater than 1, it means that investors as a whole currently have an unrealized profit. On the other hand, if it is below the mark, it suggests that a loss is prevailing in the market.
In the context of the discussed topic, we are not interested in the MVRV indicator for the entire market, but only its segment: investors who bought their coins in the last 30 days.
Here is a chart showing the trend of Bitcoin’s 30-day MVRV indicator over the past few years:
It should be noted that Bitcoin’s 30-day MVRV is displayed here as a percentage, with the zero essentially serving the same role as the value 1 in the normal version.
From the chart, we can see that the indicator jumped to high levels at the beginning of the year as the asset experienced a rapid rise to a novel all-time high (ATH). During the period of consolidation that followed this ATH, the indicator fell to oscillation around zero.
This sideways trajectory, both in price and indicator, has finally been broken as the cryptocurrency has crashed. The 30-day MVRV indicator has now fallen to a keen negative 17%, meaning that the average investor who bought in the past month is now down 17%.
As you can see from the chart, the last time the indicator fell this low was in November 2022, when the price of bitcoin collapsed after the collapse of the FTX cryptocurrency exchange. “That period marked the bottom and a great buying opportunity,” the analyst notes.
Generally, when investor profits rise too rapidly, a top may become likely as the chances of a widespread profit taking become significant. The ATH price at the beginning of the year also formed when the indicator was at a high value.
In times of vast losses, however, it is safe and sound to assume that selling has reached a point of exhaustion, meaning that a rebound may be likely. Bitcoin experienced this during the FTX crash, but the only question is whether it will suffer a similar fate this time around.
BTC price
Early signs of a potential rebound may already be apparent as bitcoin price has rebounded from a low below $50,000 to reach $54,400.
Featured image from Dall-E, Santiment.net, chart from TradingView.com
