Crypto Mommy
MVRV Divergence + A Warning but Not Bear Yet
Basically, MVRV Ratio shows us if the market is overheated or oversold. This chart is telling a complex story. Here's the breakdown: 1. The "Profit Floor" of This Bull Run (Yellow Box) Since early 2024, the MVRV ratio has found incredibly strong support in the 1.7 - 1.8 range. Every time the market has pulled back to this level, selling pressure has eased, marking it as the definitive "buy-the-dip" zone for this cycle. We're in a pullback now. If MVRV does retrace to test this profit floor, the corresponding price would be between $91,800 and $97,200. (Note: This lines up suspiciously well with the large CME gap at $91,970 - $92,525). A dump to this level isn't guaranteed, especially with a potential macro boost from the (reportedly) ending US government shutdown. Still, it's a critical support level to be cautious about. 2. The MVRV Bearish Divergence (Red Dashed Line) This is a key signal to watch. The divergence shows that while price is climbing, the market's overall unrealized profit (or "speculative heat") is declining. This is a classic warning sign of weakening momentum. However, this does not automatically mean the bear market is here. We saw a similar MVRV divergence in 2017, which was followed by a final parabolic melt-up into the mid-December peak. 3. Price Action: The Wedge Pattern Beyond MVRV, the BTC price action itself is forming a "Broadening Wedge" pattern. While technically still in an uptrend, this pattern signals extreme volatility. It's often a topping pattern because this kind of high-volatility "fanning out" is unsustainable. Eventually, one side (usually the buyers) gets exhausted, leading to a breakdown. That said, market turnover shows that new buyers are still steadily absorbing the supply. With the Clarity Act potentially passing by EOY, we could see another wave of new entrants.