Just when the leading cryptocurrency Bitcoin seemed to be recovering, it experienced further declines. Last night another drop occurred, dropping the price to around $58,000.
With this price drop, Bitcoin’s market capitalization to realized value ratio (MVRV) also fell to 1.1.
Analyzing this situation, CryptoQuant’s Crypto Dan noted that Bitcoin’s MVRV ratio, obtained by dividing its market capitalization by its realized market capitalization, has fallen to 1.1.
He also added that this ratio is the lowest level in the current cycle. The lower the MVRV ratio, the higher the probability that Bitcoin is undervalued.
The analyst noted that historically, an MVRV value below 1 signals that the market is nearing its bottom, citing 2015, 2019, 2020 and 2022 as examples.
According to the analyst, each move toward 1 or below in the MVRV ratio has coincided with a cyclical bottom and has often been the strongest accumulation signal, even during periods when most investors suffered losses.
Ki Young Ju, CEO of CryptoQuant, also said that it is still unclear whether Bitcoin has reached the bottom of its cycle.
Ju also shared an on-chain data snapshot illustrating the potential gains and losses from purchasing Bitcoin at the current price. According to the data, the market has not yet reached the low point where the risk-reward ratio peaks, as seen in previous major bear markets. Based on this data, Ju pointed out that it is unclear whether Bitcoin has reached the bottom of its cycle.
*This does not constitute investment advice.
