Bitcoin Historically Bottoms Between These MVRV Levels—Where Are They Now?

An analyst has highlighted how Bitcoin has consistently bottomed out between the 1.0 and 0.8 MVRV pricing bands during the past decade.

Bitcoin Still Hasn’t Breached Below 1.0 MVRV Band In This Cycle

In a new post on X, analyst Ali Martinez has talked about historical Bitcoin bottoms from the perspective of the MVRV Pricing Bands. This is an on-chain pricing model for BTC that’s based on the popular Market Value to Realized Value (MVRV) Ratio.

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The MVRV Ratio measures how the market cap of BTC, a representation of the value that investors are carrying in the present, compares against the Realized Cap, a proxy for the total capital invested into the cryptocurrency. In short, this indicator tells us about the profit-loss balance of BTC holders as a whole.

When the value of the MVRV Ratio is greater than 1.0, it means the average investor is currently holding a net unrealized profit. On the other hand, it being under the threshold implies the dominance of losses on the network.

Generally, the higher the investor profits get, the more likely they become to take part in profit-taking. Thus, tops can become more likely to occur as the MVRV Ratio diverges far above 1.0. Similarly, selling can reach exhaustion when the majority of the supply is underwater, implying bottoms may become probable at low MVRV levels.

Based on these behaviors, on-chain analytics firm Glassnode has created the MVRV Pricing Bands, which is a model that highlights Bitcoin price levels corresponding to certain key MVRV Ratio levels.

Below is the chart for the indicator shared by Martinez.

From the graph, it’s visible that the Bitcoin price has been trading below both the 2.4 and 3.2 bands for a while now. These levels, situated around $130,000 and $174,000, respectively, correspond to thresholds where profit realization risk becomes significant.

The cryptocurrency has faced bearish momentum recently, but its price has continued to hold above the 1.0 level. This means that despite the drawdown, the investors as a whole have remained in a state of net unrealized gain.

In the chart, the analyst has pointed out a pattern that Bitcoin has tended to follow with MVRV Pricing Bands. “Over the past decade, Bitcoin $BTC has consistently bottomed between the 1.0 and 0.8 MVRV Pricing Bands,” said Martinez. Currently, these levels sit near $54,000 and $43,000, respectively.

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It now remains to be seen whether BTC will continue to go down in the near future and retest this historical bottoming zone, or the asset will find a low before it, breaking the pattern from the previous cycles. The coin has already broken one pattern this time: it hasn’t been able to breach the 3.2 level a single time.

BTC Price

At the time of writing, Bitcoin is trading around $73,000, up more than 6% over the past week.

Featured image from Dall-E, chart from TradingView.com