There is a definite lack of confidence in the Bitcoin marketplace is deep in the cryptocurrency winter. The lower prices of the majority of cryptocurrency and the soaring temperatures outside in December coincide with an overall cooling in the segment of electronic assets. A on-chain indicator that visually captures the cold winter months for cryptocurrency is MVRVT.
In a prior analysis of the on-chain, BeInCrypto looked at five indicators that could signal the conclusion of a bear market. Additionally, we examined the timeframe of 65% from the last reduction in the size of the market in a different analysis. Today , we are combining both perspectives. We employ an indicator called the MVRVT indicator to study the current market conditions particularly in relation to the coming Bitcoin half-life event.
MVRVT confirms winter extreme weather in Bitcoin market
We have derived from the market Value to Realized Value Temperature (MVRVT) indicator for analysis on chains by using the market Value to Actual Value (MVRV) measure. The MVRV ratio is capitalization in the market to capitalization realized. It tells you how much it is that the Bitcoin price is higher or below what is known as “fair value” (red line).
We registered one of the most low MVRV measurement in the range of 0.758 in the current market cycle on the 9th of November 2022. That day the BTC price hit a record low of $15,863.
Another feature to the features that MVRVT indicator adds to its native metric are colors that are reminiscent of temperatures of BTC market. They are determined using the standard deviation of 0. This is the same as first level of the MVRV indicator, that is it is the “fair value” of Bitcoin.
The well-known analyst on the chain the Twitter handle @dilutionproof shared on Twitter an array of charts that show his MVRVT indicator in relation to the history of halves. In a chart that shows the long-term trend of the entire history of Bitcoin’s trading we see a colored graph of MVRV in relation to successive standard deviations, as well as the dates of three historical halves are marked.
The more deviation there is greater the deviation, the MVRVT indicator shifted close to red. This was the case during the historic bull market’s peak in 2011 2014, 2015, 2017, and 2021. In the most recent bull market it was not possible for the indicator to get to red however, and the bull market slowed down to orange.
However the moment MVRVT fell below 0 levels it became darker and colder towards blue. This was the case at the close of each bear market the years of 2011, 2015 and 2018 and 2015. Also, this occurred only briefly at the time of the COVID-19 crash in March 2020. The levels that are currently that have been reached since June 2022 relate to the blue hue, which indicates a significant slowing that is taking place in Bitcoin. Bitcoin market.
MVRVT as a result of BTC cutting it in half
Another method of comparing what is happening in the present bear market to its previous bear markets is to chart the graphs that comprise the MVRVT indicator every time beginning at the date of halving. This is the way @dilutionproof has showed a comparison of three post-halving cycles for Bitcoin.
We observe that at the start of each cycle, there were times of extremely extreme MVRVT deviations over the first 12-18 months following each reduction in. After that, however each of the three cycles of Bitcoin have resulted in the index falling below 0 within the 25-35 months following halves.
At present, Bitcoin is in its 31st month post-halving, and MVRVT remains lower than zero. In all the previous cycles this indicator has been almost exactly in the same spot (red arrow) throughout this time. In the response to his blog post that he posted, the analyst describes the trend “completely nuts”.
Our research suggests that the bottom in Bitcoin price could be already reached by comparing it to previous data on market cooling. Furthermore, based on which period the price movement resembles an inverse bullish turn in the trend and a rise beyond the 0 point could be as quick 2 months (cycle 2 green) or even 4 months (cycle 1 blue).
“Fair value” is $20,000, and the maximum is $165,200.
In the final of our charts that we have published, we can look at that the MVRVT indicator can be utilized to make an investment band/channel to track an extended time frame Bitcoin price. This trick offers clear suggestions to buy possibilities (blue colours below the line below)) as well as selling possibilities (yellow as well as orange above the line).
Additionally the chart gives estimates of how much BTC price would be if market prices corresponds to what is the “fair value” of Bitcoin. The current deviation of 0 is around $20,000. While anything lower is a sign of a severe cooling in the market.
However If Bitcoin was extremely overheated now in the midst of the highs of bull markets in the past and it would mean that the BTC value would rise to $165,200 at present. This is the amount for the standard level 10 variation of MVRVT’s ratio.
If history is to provide any hint of the future price fluctuations we can say that Bitcoin is likely to attain this level in the near future or even surpass it. But, it will be not sooner than twelve months following the next halving that is currently scheduled to be on April 10 2024.