Since the Bitcoin MVRV ratio has been below one (1), its market capitalization has been below its realized capitalization. The indicator has been in that region for 170 days but has remained there shorter than in the 2014-2015 bearish market.
On-chain data from CryptoQuant shows that the value of Bitcoin (BTC) has dropped over the last 170 days. According to the Market-Value-to-Realized-Value (MVRV) ratio, it has reached 0.74, its lowest point during this bearish market.
The realized capitalization model indicates that each coin in circulation has its previous price. Then all those figures add up to the whole supply to get the value of BTC.
That indicator differs from traditional market capitalization, as the coins do not have the same value as the market price of Bitcoin. Considering the cost basis of each holder in the market, it acts as the value of the cryptocurrency.
Therefore, comparing the two capitalizations (the MVRV ratio) can help determine whether the price is undervalued or overvalued.
The Market Capitalization of Bitcoin Is below Its Realized Capitalization
A recent chart shows the MVRV ratio of Bitcoin has been below one (1) over the last few months. Therefore, the market capitalization of the pioneering cryptocurrency has been below its realized capitalization.
The bearish bottoms in the price of the crypto asset have historically been in the region below 1. Besides, highs have occurred when the MVRV ratio has been higher than 3.7.
The indicator assumed values below 1 for 300 days in the 2014-2015 bearish market, dropping as low as 0.6. However, that period saw a shorter cycle, as it remained in that zone for only 134 days.
The MVRV ratio of Bitcoin has been in that region for 170 days in the current cycle, reaching as low as 0.74. Although the indicator has remained there longer than during the last period, it has been shorter than between 2014 and 2015.
Since the metric is not as deep as in those cycles, the bears might go lower before Bitcoin bottoms out.
The Behavior of the Price of Bitcoin over the Last Week
The value of Bitcoin has remained above the USD 17,000 resistance zone over the last seven days. It could rise above the USD 17,100 and USD 17,200 resistance levels.
The pioneering cryptocurrency exceeded USD 17,400, trading close to the USD 17,500 resistance zone. However, the bears remained active near USD 17,500, forming a high near USD 17,440 before the price started a bearish correction.
Bitcoin dipped below the USD 17,200 level and the 100-hour SMA, breaking below the crucial upward trend line with support near USD 17,050.
Although the price was as low as USD 16,888, it is now rising to trade near USD 17,000 and the 100-hour SMA. It is above the 23.6% Fibonacci retracement level of the recent decline from the USD 17,440 high to the USD 16,888 low.
Bitcoin is trading at around USD 17,008 and has accumulated a 4.8% gain over the last week. While its daily trading volume is above USD 20.60 billion, its market capitalization is about USD 317.06 billion, according to CoinGecko.
By Alexander Salazar
