Metric analysis

This Bitcoin metric is in “pain,” hinting at a potential reversal

Arman Shirinyan

The long-awaited reversal in the cryptocurrency market could be imminent according to this metric

One of the most popular on-chain metrics in the industry—MVRV— shows that short, medium, and even long-term trading returns are in the “pain” zone, which is historically a sign of an upcoming price reversal. The main question remains when this will happen.

The MVRV metric shows the ratio between the current price and the average price of an asset acquired by an entity. With the ratio reaching high levels, more people will look to sell their assets due to increased profits. The indicator allows us to determine whether the asset is overbought or oversold.

With an MVRV of 100%, or 2.0, investors could sell their holdings for a profit of 100% on average, which is historically the exact point of a reversal in the cryptocurrency market.

According to the data provided by the indicator at present, most investors hold the asset with a massive loss, regardless of how long they hold it. For now, Bitcoin remains underbought across all timeframes and among all trader groups.

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The “technical alternative” of the MVRV indicator – the relative strength index – also shows that bitcoin is oscillating between an oversold state and a normal state, as it could barely break out of the undervaluation range and come back. to its normal state in the market.

Over the past seven trading days, digital gold has lost 12.5% ​​of its value due to a lack of purchasing power that would support a rally, which began on June 20. Volume profiles suggest that the first cryptocurrency may not show any kind of volatility. as inflows into the crypto market remain at relatively low levels.

At press time, Bitcoin is changing hands at $19,160 and has lost 0.4% of its value in the past 24 hours.