Just when it appeared that the leading cryptocurrency Bitcoin was recovering, a new selloff occurred. A further decline occurred yesterday evening, bringing the price down to around $58,000.
Along with this price drop, Bitcoin’s market capitalization/realized value ratio (MVRV) also fell to 1.1.
Analyzing this situation, Crypto Dan of CryptoQuant pointed out that the MVRV ratio, which is Bitcoin’s market capitalization divided by its realized market capitalization, has fallen to 1.1.
He also added that this ratio is the lowest level in the current cycle. The lower the MVRV ratio, the more likely Bitcoin is undervalued.
Historically, the analyst pointed out, citing 2015, 2019, 2020 and 2022 as examples, an MVRV value below 1 indicates the market is nearing the bottom.
According to the analyst, any movement in the MVRV ratio below 1 coincides with a cyclical bottom, and is often the strongest cumulative signal, even during periods when most investors have suffered losses.
CryptoQuant CEO Ki Young Ju also said that it is still unclear whether Bitcoin has reached the bottom of the cycle.
Zhu also shared a snapshot of on-chain data showing the potential profits and losses if you buy Bitcoin at its current price. The data shows that the market has not yet reached the trough where the risk-reward ratio peaks, as seen in past major bear markets. Based on this data, Ju emphasized that it remains unclear whether Bitcoin has reached the bottom of the cycle.
*This is not investment advice.
