Yonsei_dent2024-08-21

MVRV Ratio Momentum at Risk of Death Cross

The MVRV ratio is an indicator that represents the ratio between the realized value and the market value, serving as an on-chain tool to determine whether the market is overvalued or undervalued. By applying 30-day and 365-day moving averages to the MVRV ratio and observing their relationship, we can detect changes in market momentum. After reaching an all-time high (ATH) in March 2024, the 30-day moving average (DMA) has rapidly declined and is now touching the 365 DMA. Currently, the MVRV ratio is around 1.8 to 1.9, indicating that the market value is nearly twice the realized value, suggesting the market is not yet in significant pain. However, the decrease in MVRV while the market price remains sideways implies that, slowly but steadily, supply is being transferred to new demand (changing hands). In the previous cycle, after the MVRV momentum experienced a death cross, the market entered a full-blown bearish phase. Therefore, it is crucial to monitor whether the 30 DMA continues to decline. If the 30 DMA finds support at the 365 DMA and starts to rise again, it could signal a potential increase in BTC’s price.