BTC price has risen above its realized price.
Market-Value-To-Realized-Value (MVRV) is an indicator that measures the relationship between market and realized capitalization levels. Values above 1 show that the market capitalization is greater than the realized capitalization, while those below 1 show the opposite. Subsequently, MVRV Z-score uses a standard deviation to normalize the values.
On this occasion, the on-chain indicators of Bitcoin (BTC) are analyzed, focusing on the MVRV and its recovery towards positive territory.
MVRV Z-Score
Historically, values between 7 and 9 have coincided with the highs of the market cycle, while those below 0 have coincided with the lows. The gauge has been falling since February 2021, when it peaked at 7.53.
The indicator has fallen into negative territory four times since 2015 (black circles). He did it in: January 2015, December 2018, March 2020, and June 2022
Historically, after the indicator moves out of its oversold territory, it confirms that a bottom has been reached. In 2022, it did so on July 20. As a result, if the previous history is followed, it would mean that BTC has bottomed out.
BTC Realized Price
The movement of the MVRV indicator can be best visualized using BTC and its realized price, an indicator that measures the price at the time the last transaction was made.
While BTC fell below it, it has now regained its realized price (black circle), which currently sits at $21,700. Historically, once the realized price recovers, BTC has never dropped below it before starting a significant bullish rally.
Additionally, the time that MVRV was negative (red circle) was approximately 40 days, longer than March 2020, but shorter than December 2018 and January 2015.
Therefore, these two indicators are aligned, hinting that a bottom has been reached.
It is worth remembering that according to an analysis published a few days ago, Bitcoin had been rising since hitting a local low of $17,622 on June 18. However, the up move stalled at a high of $25,211 on August 12.
BTC has been moving lower ever since and is in the process of creating a large bearish candle. On August 19, BTC fell back to around $21,447 and recovered slightly.
BTC has been trading inside an ascending parallel channel since hitting its low on June 18. Such channels often contain corrective patterns, meaning that an eventual breakout of the channel would be expected.
Anyway, before making any type of investment, the recommendation is to carry out an in-depth study on each Blockchain.
Examples of in-depth studies consist of analyzing its whitepaper, token distribution, influence and dependence on social networks, market share of TVL blockchains, expansion of development, solidity in its infrastructure, performance, Blockchain ecosystem, cross-chain tools, support, and developers behind each Blockchain project, long-term planning for the construction of new ecosystems and incentives if it is a centralized or decentralized system, etc.
In conclusion, it is best to collect as much information as possible and do your own research.
By Audy Castaneda
