Although the market leader, Bitcoin, cannot determine its price trajectory from time to time, it has managed to become one of the favorite assets of investors and traders. As BTC’s value continues to fluctuate, many analysts continue to focus on different metrics to predict future price action. The subject of the reports presented by CryptoQuant “Bitcoin MVRV rate” is among these metrics.
According to CryptoQuant’s report, the Bitcoin MVRV rate is obtained by dividing the current market capitalization by the realized capitalization. Thus, it uses two different measures of the value of BTC. The report highlights the usefulness of the MVRV ratio in detecting market trends. Because, this ratio can show potential selling pressure or a potential decrease in selling pressure based on the market value and actual value relationship.
Koinfinans.com As we have reported, the historical analysis of the MVRV rate according to the aforementioned report offers remarkable results. This historical time frame is associated with its effectiveness in predicting market trends over the three semesters. Noting that during the COVID-19 period, the MVRV rate turned green and showed the value above 1, the report stated that the rate continued to rise and reached values above 3.75. This is as a result bitcoin pricehelped him reach the top. However, during the Chinese ban, the MVRV rate dropped from that high to 1.5 before rebounding and falling below 3.
The report then highlighted a pattern of decreasing MVRV rate, finding it hit a low of 0.75 in November 2022. However, the rate managed to break above 1 in January 2023, supported by a significant surge in BTC price due to significant backlog in both the spot and derivatives markets, and a record number of open interest in options.
The report raises the question of whether the MVRV rate will exceed 1.5 to continue the upward trend. In the author’s view, this is highly likely given the rapid withdrawal of Bitcoin from exchanges and the consequent reduction in supply.
Overall, the report highlights the usefulness of the Bitcoin MVRV ratio in predicting market trends. However, the report does not miss the latest fluctuations in response to global events. Cryptocurrency As the market continues to evolve, investors and analysts are likely to continue looking for new benchmarks to learn about Bitcoin’s future performance.
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