On-chain data shows Bitcoin has been undervalued for 170 days. So this number compares to that during the previous bear market.
Bitcoin MVRV ratio has been below “1” for 170 days.
As one analyst pointed out in a CryptoQuant post, the lowest point the MVRV ratio has seen so far in this bear is 0.74.
The “MVRV Ratio” is an indicator that measures the ratio between Bitcoin’s market cap and its realized cap.
Here, the “realized cap” is a BTC cap model that takes the value of each circulating coin as the price at which it was last moved/sold. All these values are then summed up for the entire supply to get the value of BTC.
This is unlike normal market cap, where all coins are given the same value as the current bitcoin price. The utility of the realized cap is that it acts as a kind of “real value” for the crypto as it takes into account each holder’s cost basis in the market.
Therefore, a comparison between the two ceilings (what the MVRV ratio is) can tell us whether the current BTC price is currently undervalued or overvalued.
The chart below shows the trend of the Bitcoin-MVRV ratio over the past few years:
The value of the metric seems to have been below one for the past few days | Source: CryptoQuant
As you can see in the chart above, the Bitcoin MVRV ratio has been below a value of 1 for the past few months, which means that the market cap has been below the realized cap.
Historically, bear lows in crypto price have been observed in the sub 1 region. On the other hand, the ratio is greater than 3.7 when highs have been seen.
In the 2014-15 bear market, the indicator dipped below 1 for 300 days, falling as low as 0.6 during that period.
However, the 2018-19 bear experienced a shorter cycle as it only stayed in this zone for 134 days. Also, the low of 0.69 was not as low as 2014-15.
In the current Bitcoin cycle so far, the metric has spent 170 days in this region, recording a low of 0.74.
The MVRV ratio in this region is therefore longer now than it was during the last cycle, but it is still nowhere near as long as it was in 2014-15.
The depth of the metric is also not as great as it has been in each of the two cycles, so it is possible that the bear will go even deeper before Bitcoin finds the bottom of this cycle.
BTC price
At the time of writing, the price of Bitcoin is hovering around $17.2k, up 7% over the past week.
BTC has surged | Source: BTCUSD on TradingView Featured image by Maxim Hopman on Unsplash.com, charts by TradingView.com, CryptoQuant.com
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