Bitcoin is in the early stages of a new bull market.
That’s according to analysis of a widely followed technical indicator called the Market Value to Realized Value Ratio, or MVRV Ratio.
This ratio, which is calculated by dividing Bitcoin’s current market capitalization by its market capitalization at the realized price (i.e. the average price at which each individual Bitcoin token last moved), recently hit 1.48, its highest level since last April.
It rose back above 1 this January for the first time since November 2022 and has been rising ever since given the ongoing rise of the Bitcoin price.
As can be seen in the above graph, the MVRV Ratio falling below 1.0 has historically happened during the late stages of a Bitcoin bear market.
Indeed, the index rising back above 1.0 on a sustained basis has historically acted as a great buy signal, as it signals that Bitcoin has entered into the early stages of a bull market.
And that certainly seems to be the case right now.
Glassnode’s preferred MVRV-related indicator to monitor is the MVRV Ratio’s Z-score.
They calculate this by subtracting Bitcoin’s market cap from its realized cap and then dividing by the standard deviation of Bitcoin’s market cap throughout its history.
This Z-score was last at around 0.71 on Monday, having risen back above zero earlier this year in tandem with Bitcoin’s price recovery.
Typically a sustained recovery from sub-zero levels, as we are currently witnessing, has coincided with the early stages of a Bitcoin bull market.
Assuming that a new Bitcoin bull market has begun, long-term investors will now be assessing how high prices could rise in the coming years as they assess at what levels to take profit.
The MVRV Ratio can be useful in determining when the
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