Bad news for Bitcoin bulls: according to a recent Bitcoin chart analysis on X, Bitcoin has fallen below the MVRV pricing band of +0.5σ at $67,890. What does this mean?
MVRV stands for “Market Value to Realized Value.” This pricing band is a financial metric used to evaluate the relative value of Bitcoin and other cryptocurrencies. It compares the market capitalization (market value) to the realized capitalization (realized value).
According to the Bitcoin chart analysis, the MVRV signals a potential adjustment to $54,930, the mean pricing band. However, it’s important to note that this is not a definitive prediction.
The current price is $65,700, which is a positive sign that Bitcoin has managed to find support above $65,000. Despite the potential for losses this week, mainly due to persisting spot Bitcoin ETF outflows, Bitcoin’s ability to hold its ground is a testament to the market’s resilience.
Barrons writes that these outflows have been almost $300 million so far this week, citing data from Coinglass. Relatively high bond yields have been holding the crypto market back as the market scales back expectations for Fed-driven interest-rate cuts.
Open interest and market sentiment are receding.
Apart from the Bitcoin chart analysis, futures open interest and market sentiment are also plummeting. On Wednesday, an attempt to reverse the losses since the drop from March’s all-time high lost steam. If selling pressure continues to increase in the US session, Bitcoin might have to sweep through $62,500 and $60,000 to gain liquidity for the subsequent rebound.
As spot Bitcoin ETF outflows continue, Bitcoin either plummets or struggles to find direction, ultimately undergoing price consolidation.
Explaining market and realized value
The market value is Bitcoin’s current market cap, calculated by multiplying the price and the total supply. The realized value adjusts the market value by considering the price at which Bitcoin (BTC) last moved. It sums the value of Bitcoin based on the price at the time it was last transacted. This provides a more historical and long-term view of the value stored.
The MVRV ratio, derived by dividing the market value by the realized value, is a key tool in our analysis. It helps to identify whether Bitcoin is overvalued or undervalued relative to its historical value. High MVRV ratios may indicate overvaluation (a potential sell signal), while low MVRV ratios may suggest undervaluation (a potential buy signal).
MVRV pricing bands represent different thresholds of the MVRV ratio, which can be used to understand the potential pricing behavior. An MVRV ratio significantly above one may indicate a good time to take profits, while a ratio below one might suggest an opportunity to buy Bitcoin.
