The Bitcoin Market Value to Realized Value (MVRV) Ratio provides insight into whether the current bull run is over or not. The MVRV Ratio compares the value held by BTC investors to the value they initially put into the asset. When the ratio is above 1, it indicates investors are in profit, while a ratio below 1 implies losses.
CryptoQuant founder Ki Young Ju shared a chart of the True MVRV Ratio, which considers only coins involved in recent transaction activity. This exclusion of coins older than seven years, assumed to be lost, provides a more accurate representation of the market. The chart shows the True MVRV has reached high levels during the current bull run, indicating significant profits for investors.
Historically, high profits have been associated with mass selloffs as investors look to take profits. The MVRV Ratio has not yet reached the levels seen at previous cycle tops, suggesting the bull run may have room to continue. This is supported by $7 billion in weekly capital inflows into the Bitcoin market, preventing the market cap from overheating relative to the realized cap.
At present, Bitcoin’s value has retraced from its Christmas rally to $95,700. The True MVRV Ratio, while high, is not extremely high, indicating potential room for further growth in the current cycle. The historical trend of the MVRV Ratio suggests that as long as the ratio remains below a specific level, there may still be upside potential for BTC in the current bull run.
In conclusion, the MVRV Ratio is a crucial metric to monitor in assessing the state of the Bitcoin market. The True MVRV, which excludes coins likely lost forever, provides a more accurate representation of the market conditions. The current high but not extreme levels of the True MVRV suggest potential for further growth in the ongoing bull run. With significant capital inflows supporting the market, Bitcoin may have room to continue its upward trajectory. Monitoring the MVRV Ratio and its historical trends can help investors make informed decisions in a volatile market environment.
