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A popular on-chain metric suggests that the crypto bull market is still far too young for investors to consider selling their Bitcoin, according to CryptoQuant’s Thursday report.
The market intelligence firm published a research quick take analyzing whether Bitcoin was nearing a “distribution zone” / market peak or if current prices were still a good buy point for investors.
MVRV: The Ultimate Indicator
“There is only one indicator that can be used to determine the best action for long-term investors in the current times,” authorized analyst Tarek On-Chain said. “The MVRV (Market Value to Realized Value) indicator gives a highly accurate alert for Bitcoin price tops and bottoms.”
Is #Bitcoin Heading for a New Peak? Key Insights You Need to Know!
“This means we are still somewhat far from the peak, and the price will achieve a new high in this cycle, which could be above $100k.” – By @OnchainTarek
Read more https://t.co/EDnknAHofm
— CryptoQuant.com (@cryptoquant_com) May 30, 2024
The Bitcoin MVRV indicator is a classic on-chain metric that measures the ratio between Bitcoin’s market cap and its “realized cap”.
The market cap – a more familiar financial metric – is the combined total value of all circulating Bitcoin based on Bitcoin’s current market price. The realized cap, by contrast, calculates the value of all coins based on the last time each individual coin moved on-chain.
MVRV is often used to measure the degree of profit that Bitcoin investors are sitting on, assuming that the realized price of each coin equals a specific buyer’s entry point. For example, a ratio of 2.0 means that the average coin has doubled in value since it was last bought.
Don’t Sell Your Bitcoin Yet, Says CryptoQuant
Throughout Bitcoin’s history, MVRV has almost always stayed above 1.0, except for the late 2022 bear market. According to Tarek, values below 2.0 generally mean Bitcoin is in an accumulation zone and is “still below its true value.”
By contrast, bull cycle peaks generally occur when the value exceeds 3.5, meaning the network sits on 250% profits. The higher that unrealized profits rise, the more long-term holders who are massively in the green are incentivized to start taking money off the table.
At present, Bitcoin’s MVRV score is 2.3.
“This means we are still somewhat far from the peak, and the price will achieve a new high in this cycle, which could be above $100k,” wrote Tarek. “Exiting should only start when the indicator approaches a value of 3.”
In their latest weekly report, CryptoQuant said bulls have little to worry about regarding the Mt. Gox bankruptcy, which recently began moving coins on-chain in preparation for creditor repayments. The distributions, expected later this year, will put over 141,000 BTC back into the network’s circulating supply.
“There is no immediate selling pressure for Bitcoin from these movements as the transfers have occurred within the addresses of the same entity (Mt. Gox Rehabilitation Trustee) and are not still available to the open market,” the firm wrote.
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