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On-chain analytics company Glassnode has revealed the level to which Bitcoin must rise if it is to reach an all-time high in this price model.
Bitcoin Has Not Exceeded The Last MVRV Price Band Yet
In a new post on X, Glassnode talked about the extreme euphoria of Bitcoin Market Value to Realized Value (MVRV) Pricing Bands. MVRV Pricing Bands is a cryptocurrency pricing model based on the MVRV Ratio.
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The “MVRV Ratio” is a popular indicator that keeps track of how much Bitcoin investors have retained (ie, the market cap) compared to the amount they initially invested (the available cap). If the metric is greater than 1, investors are holding a greater amount than their initial investment, which means they are in a net profit position. On the other hand, being below the threshold suggests that the market as a whole is underwater.
Historically, the most profitable owners have shown overheated conditions for Bitcoin, because a lot of selling for the purpose of taking profits is possible in such conditions. Similarly, the dominance of losses led to collapse, as there were not many traders left during these periods.
MVRV Pricing Bands aim to capture this relationship. It describes certain cryptocurrency price levels that correspond to key levels in the MVRV Ratio.
Here’s a model chart shared by Glassnode that shows the trend in these Bitcoin price bands over the past few years:
From the graph, it can be seen that the 0.8 price band, which is the point where the MVRV Ratio takes a value equal to 0.8, was where the bottom of the bear market was formed. Currently, BTC is well above this level, located at $33,100. The price of the coin is also in a significant distance from the 1.0 level of $41,300, which corresponds to the cost base of the central address or investor in the network.
The price ranges that BTC is currently trading under are the 2.4 and 3.2 levels, located at $99,300 and $132,400, respectively. The first of these has served as a sign that the bull market is heating up.
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BTC may stay within this zone for a while, but if the market crosses the 3.2 level, it becomes more likely that some kind of top will be hit soon.
The chart below shows how rare it is for a stock to trade above 3.2:
“BTC price has historically spent only ~5% of trading days above the 3.2 MVRV level,” notes the analytics firm. “This highlights how such peaks occur and underlines why they are often regarded as places of “extreme happiness”.”
So far, Bitcoin has not been able to cross this line in the current cycle. If past bull markets are anything to go by, the upside would only occur above this level, which would mean plenty of room left for the stock to perform in the current cycle. It remains to be seen, however, whether the pattern will hold this time or not.
BTC price
At the time of writing, Bitcoin is trading around $93,400, down more than 3% in the past seven days.
Featured image from Dall-E, Glassnode.com, chart from TradingView.com