The recent surge in Bitcoin's price has drawn analysts' attention, urging them to focus on the key metric of MVRV. This ratio plays a crucial role in assessing the market value of the cryptocurrency.
What is MVRV?
MVRV (Market Value to Realized Value) is a ratio that compares Bitcoin's market capitalization to the value of coins based on their acquisition price. It helps gauge whether BTC is overvalued or undervalued relative to historical norms.
Golden Cross and Its Significance
Technically, Bitcoin's 30-day moving average has just crossed above the 365-day moving average, forming a golden cross—a bullish signal often associated with continued upward price momentum.
Mixed Signals and Market Caution
Despite the strong price momentum, the MVRV is not confirming the rally. Instead of rising with the new price peak, this ratio is falling, signaling a potential divergence. This mirrors similar signals observed in 2021, when prices soared, but the MVRV remained unchanged, foreshadowing the start of a prolonged bear market.
Therefore, it is crucial to monitor key support levels both on-chain and off-chain. If buying activity weakens further or MVRV continues to diverge, the rally may lose steam.
