Bitcoin’s price has been on the decline for the past few days and has dropped below $33,342 in the process. According to a market indicator pointed to by Ki-Young Ju, CEO of crypto analytics firm CryptoQuant, Bitcoin may not have hit the bottom yet during the crash. The indicator in question is the ratio of Market Value to Realized Value (MVRV), which usually determines the cyclical bottom. The MVRV metric is used by analysts to identify market highs and lows. According to this indicator, Bitcoin’s price drop is still a little off the bottom.
Bitcoin has lost 13.7% in the last 7 days and is currently trading around $36,800. Bitcoin price scrapped many expectations as it plummeted below support levels that many analysts had predicted. The new data shows that the metric in question can tell the bottom price of Bitcoin.
Ki-Young Ju noted that the ratio of Market Cap to Realized Value (MVRV) can be used to mark the cyclical bottom of the market. Currently, the MVRV ratio sits at 1.50, indicating that Bitcoin wallets collectively still have over 50% unrealized profits. A low MVRV ratio indicates that most investors are making a loss, so a sale is unlikely. Historically, when this metric fell below 1, it marked possible bottoms in the market and led to a trend reversal in upward price movements.
“MVRV is currently 1.50. This shows that Bitcoin wallets have an unrealized 50% profit. If this is the end of the bull market, we must keep our eyes on these classic indicators to catch the cyclical bottom. Historically, the cyclical bottom comes when the MVRV falls below 1.
While MVRV reaching 1 is a good time to take a progressive long position, Ju warns that the indicator isn’t quite marking the bottom. Expressing that the price may drop a little more even if it goes below 1, the famous CEO said that cyclical bottoms will continue to decrease after MVRV 1 is below:
“2020/03/12: 0.85 (15% loss)
2018/12/14: 0.69 (31% loss)
2015/01/14: 0.58 (42% loss)
2012/02/18: 0.84 (16% loss).”
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.