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- The crypto market continues to “bleed” as Bitcoin (BTC) records a -10.18% MVRV ratio intraday, reaching the “Good Buy” territory.
- Santiment has noted that the lower the MVRV goes, the higher the probability of a rapid recovery.
CoinMarketCap data confirms that the crypto market is in extreme pain as the total market capitalization records a 4% decline to $3.09 trillion. Bitcoin’s (BTC) dominance has fallen to 58% as it witnesses negative returns on its daily price chart (5%) and its weekly chart (14%).
Currently, the largest crypto in the market is attempting to drop into the $80k-$89k territory as it hovers around the $90k zone.
In the midst of these, the top altcoins have also taken a serious hit, with the Altcoin Index receding to 32/100. Crypto analytics platform Santiment has noted that the Market Value to Realized Value (MVRV) ratio of most of these coins has reached a historical level. For context, the MVRV ratio is used to determine the average profit or loss across all circulating coins.
Details of Bitcoin, Ethereum, XRP, Chainlink, and Cardano’s MVRV Ratio
According to Santiment, XRP and BTC fell under the large retail losses category with a 30-day MVRV ratio intraday of -10.18% and -11.55% respectively. Based on this, these assets were tipped as a “Good Buy”. The data also shows that Ethereum (ETH), Chainlink (LINK), and Cardano (ADA) had MVRV ratios intraday of negative 15.43, 16.8%, and 19.73% respectively.
Technically, these assets fell under the extreme retail losses category or the “Great Buy Zone.”.
As mentioned in our earlier discussion, ETH has already witnessed a sharp rise in large holder accumulation amidst the short-term traders’ pullback. Commenting on these MVRVs, Santiment noted that it is important to enter the market when it is “bleeding”.
As noted in our earlier publication, Santiment predicts that there could be a strong bullish reversal for the market.
Use MVRV to find out what a ‘buy low’ zone actually is, as opposed to simply looking at trendlines and support (though both are still viable). In a zero-sum game, buy assets when the average trade returns of your peers are in extreme negative territory. The lower the MVRVs go, the higher the probability of a rapid recovery.
Our research also shows that a quick recovery in this particular situation cannot be guaranteed, as the current liquidation coincides with the average time Bitcoin historically peaks. This usually happens in 400 and 600 days after its previous halving event.
As featured in our recent coverage, Binance has so far received 35,000 BTC since October 26, confirming strong selling pressure. However, Bernstein analysts led by Gautam Chhugani call for calm as they believe the current market environment does not feel like a cycle peak.
It rather feels like a structural multi-year trend of institutional participation in Bitcoin and crypto capital markets, with occasional corrections along the way. We are observing if Bitcoin can bottom close to ~$80K range seen immediately post the Trump election. We believe the current market weakness may provide an attractive entry for new investors.
For now, the fate of the crypto market depends on six key US economic activities, including the FOMO meeting on Wednesday, as indicated in our previous news brief.
