Data from a Bitcoin pricing model based on an on-chain indicator suggests that $77,600 could be the level where the asset will see its next peak.
Bitcoin MVRV pricing ranges can provide hints about what's next
In new mail At X, analyst Ali discussed what the Market Value to Realized Value (MVRV) pricing range model could suggest about the future of cryptocurrency.
The MVRV ratio is a popular on-chain indicator that compares Bitcoin's market cap and realized value. The former is just the overall valuation of the asset at the current spot rate, while the latter is a model that calculates the maximum value of the asset by assuming that the “true” value of any traded currency is the price at which it was last converted on the market. blockchain.
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The previous transfer of any currency on the network will likely be the last time it was traded, and therefore, the price at that time will be the current cost basis. As such, the maximum realized tracks the sum of each investor's cost basis in the market.
Therefore, the MVRV ratio tells us how the value held by investors (market value) compares with the value they put in (realized value).
Based on this indicator, on-chain analytics company Glassnode developed a pricing bands model. Below is a chart showing what these pricing ranges look like.
Pricing bands in this model represent levels corresponding to a specific deviation from the average MVRV ratio. From the chart, it appears that the cryptocurrency is currently above the price level, which is equivalent to +0.5 standard deviation (SD) from the index mean.
More specifically, a price level of around $65,100 would be where the MVRV ratio is +0.5 SD above its average. The next major pricing range in this model is +1 SD, which currently corresponds to around $77,600.
In the past, this level was where at least local tops for BTC were likely to form. As can be seen in the chart, the peak of the rally also occurred in March when Bitcoin broke this level.
“Based on MVRV pricing ranges, if Bitcoin continues to trade above $65,125, BTC’s next local high before a short correction could be around $77,593!” The analyst notes.
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From the cryptocurrency's current spot price, a potential rise to a new all-time high of $77,593 would mean an upside of more than 11% for the asset. It now remains to see how the price of the asset will develop from here and whether it will be able to maintain the level of +0.5 SD MVRV.
Bitcoin price
Since its earlier sharp rise, Bitcoin's bullish momentum appears to have slowed as the asset fell into a sideways move around the $69,700 mark.
Featured image by Kanchanara on Unsplash.com, Glassnode.com, chart from TradingView.com