The analyst highlighted how Bitcoin has hovered between the 1.0 and 0.8 MVRV price bands over the past decade.
Bitcoin Still Has Not Break Below 1.0 MVRV Band In This Cycle
In a new post on X, analyst Ali Martinez talked about the history of Bitcoin bottoms from the perspective of MVRV Pricing Bands. This is an on-chain price model for BTC based on the Market Value to Realized Value Ratio (MVRV) Ratio.
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The MVRV Ratio measures how the BTC market cap, a representation of the value investors currently hold, is compared to the Realized Cap, a proxy for the amount of money invested in the cryptocurrency. In short, this indicator tells us about the profit-loss balance of BTC holders as a whole.
If the MVRV Ratio value is greater than 1.0, it means that the average investor is currently holding unrealized profits. On the other hand, being under the threshold means loss dominance in the network.
In general, the higher the investors’ profits, the more likely they are to participate in profit taking. Therefore, peaks are more likely to occur as the MVRV Ratio diverges significantly above 1.0. Similarly, sales can reach exhaustion when most of the supply is underwater, meaning bottoms may be possible at lower MVRV levels.
Based on this behavior, the on-chain analytics company Glassnode has created MVRV Pricing Bands, which is a model that highlights Bitcoin price levels that correspond to certain important levels of the MVRV Ratio.
Below is the indicator chart shared by Martinez.
From the graph, it can be seen that Bitcoin price has been trading below both the 2.4 and 3.2 bands for a while now. These levels, found at around $130,000 and $174,000, respectively, correspond to thresholds where the risk of profit is high.
The cryptocurrency has faced bearish momentum recently, but its price has continued to hold above the 1.0 level. This means that despite the drawdown, investors as a whole remain in a position of unattainable profits.
In the chart, the analyst revealed the pattern that Bitcoin tends to follow with MVRV Pricing Bands. “Over the past decade, Bitcoin $BTC has been moving between the 1.0 and 0.8 MVRV Pricing Bands,” Martinez said. Currently, these levels sit near $54,000 and $43,000, respectively.
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Now it remains to be seen whether BTC will continue to decline in the near future and retest this historical territory, or the commodity will find a low before it, breaking the pattern of previous cycles. The coin has already broken one pattern this time: it failed to break the 3.2 level in one go.
BTC price
At the time of writing, Bitcoin is trading around $73,000, up more than 6% over the past week.
Featured image from Dall-E, chart from TradingView.com
