Crypto analytics firm IntoTheBlock says that one key metric indicates Bitcoin (BTC) has entered the initial stages of a bull market cycle.
In a new blog post, the firm says that Bitcoin’s market-value-to-realized-value (MVRV) ratio is behaving similarly to previous bear-to-bull market transitions.
“When the MVRV ratio drops below 100%, it shows that Bitcoin is at prices below than the average purchasing price of its holders. Bear markets have tended to bottom when the MVRV drops to 70% to 80%, representing a buying opportunity. Additionally, every time that the MVRV has gone back above 100% after falling below it has pointed to the beginning of a bull market.
By this metric, Bitcoin’s bull market began in January of this year and could have further room to appreciate if it reaches the levels of 300%+ in MVRV seen towards the end of previous bull markets. Overall, on-chain indicators appear to suggest Bitcoin is in the early stages of a bull market.”
The MVRV is the ratio of an asset’s market cap versus its realized capitalization – the value of all Bitcoin at the price they were bought at, not the current price – and seeks to capture market bottoms and tops.
However, IntoTheBlock warns that there is a chance that the prior MVRV and BTC market patterns may not repeat this time around.
“Ultimately, though previous patterns do not necessarily guarantee Bitcoin’s returns, the alignment of positive supply and demand catalysts increase the likelihood of another Bitcoin cycle taking place.”
Bitcoin is trading for $33,841 at time of writing.
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