Bitcoin is nearing what analysts describe as an “undervalued” zone, reflecting a significant market shift as its MVRV ratio approaches critical levels not observed in three years.
Key Observations:
- Recent analysis indicates that Bitcoin has not been this “undervalued” since March 2023.
- The MVRV ratio is moving toward its breakeven point for the first time in over three years.
- Current metrics suggest that Bitcoin may be on the verge of reversing its recent downtrend.
Bitcoin MVRV Metric Indicates Valuation Around $20,000
Research published by CryptoQuant reveals important insights about Bitcoin’s market valuation. The MVRV ratio is a key indicator that compares Bitcoin’s market cap with its realized cap, which represents the price at which the Bitcoin supply last moved.
Values below 1 indicate an undervaluation of the asset. Recently, as Bitcoin’s price fell below $60,000, the MVRV dropped to 1.13, marking its lowest point since March 2023, when it was valued at $20,000.
“Generally, when the MVRV ratio falls below 1, Bitcoin is regarded as undervalued. At present, the indicator stands at around 1.1, suggesting that price levels are nearing the undervaluation range.” - Crypto Dan
“一般来说，当 MVRV 比例低于 1 时，比特币被认为被低估。目前，该指标约为 1.1，表明价格水平接近低估区间。”
The MVRV last registered below 1 at the beginning of 2023, coinciding with Bitcoin’s peak last October at 2.28. Analysts are questioning the significance of Bitcoin’s 52% drop from its all-time high, which seems anomalous compared to historical trends.
“This distinction is crucial. As a result, the current decline may differ from previous market bottoms, and we should consider this possibility moving forward.” - Crypto Dan
“这一区别至关重要。因此，当前的下降可能与以往市场底部不同，我们应该对此可能性保持警惕。”
Current Bitcoin Price Action Suggests a Shift
Earlier reports indicated potential trend reversals in Bitcoin’s price action. According to Cointelegraph’s previous articles, the Z-score of the MVRV ratio suggests Bitcoin was in a favorable position compared to past market downturns.
GugaOnChain also highlighted a possible accumulation phase.
“The statistical deviation of the Z-Score screams opportunity, signaling that the bottom of this downtrend is being forged right now.” - Guga OnChain
“Z-Score 的统计差异显示出机会，表明当前的下跌底部正在形成。”
Bitcoin MVRV ratio adaptive Z-score data (screenshot). Source: CryptoQuant
This article does not offer investment advice. All trading decisions carry risk, and readers are encouraged to conduct their own research.
