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On-chain analytics company Glassnode has revealed the level to which Bitcoin must rise if it is to reach the historic upper zone in this pricing model.
Bitcoin has not crossed the latest MVRV pricing range yet
In new mail On MVRV pricing ranges are a cryptocurrency pricing model based on the MVRV ratio.
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The “MVRV Ratio” is a popular on-chain indicator that tracks how the value held by Bitcoin investors (i.e. market value) compares to the value they initially placed in (realized value). When the measure is greater than 1, investors retain more value than their initial investment, which means they are in a state of net profit. On the other hand, its presence below the threshold indicates that the market as a whole is underwater.
Historically, holders making profits often indicate overheated conditions for Bitcoin, due to the fact that mass sell-offs motivated by profit-taking become likely in such conditions. Likewise, loss dominance led to bottoms, as not many sellers remained during these periods.
MVRV pricing ranges aim to capture this relationship. It defines certain price levels for the cryptocurrency that correspond to important levels in the MVRV ratio.
Here is the sample chart shared by Glassnode that shows the trend in these Bitcoin pricing ranges over the past several years:
From the chart, it appears that the 0.8 pricing range, where the MVRV ratio assumes a value equal to 0.8, was around where bear market lows formed for the asset. Currently, it is well above this level, sitting at $33,100. The coin price is also a significant distance away from the 1.0 level of $41,300, which corresponds to the cost basis of the average address or investor on the network.
The pricing ranges within which BTC is currently trading are levels 2.4 and 3.2, located at $99,300 and $132,400, respectively. The former has historically served as a signal that a bull market is heating up.
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BTC could stay within this zone for a while, but once the market cap crosses the 3.2 level, it becomes very likely that some sort of top will be reached soon.
The chart below shows how rarely the asset trades in the area above 3.2:
“BTC price has historically spent only approximately 5% of trading days above the 3.2 MVRV level,” the analytics firm notes. “This highlights how rare such peaks are and reinforces why they are often considered an ‘extreme ecstasy’ zone.”
So far, Bitcoin has not been able to cross this line in the current session. If past bull markets are anything to go by, the top will only occur above this level, implying more room left for the asset to run in the current cycle. However, it remains to be seen whether the pattern will actually hold up this time or not.
Bitcoin price
At the time of writing, Bitcoin is trading at around $93,400, down more than 3% over the past seven days.
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
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