Importance of Bitcoin STH MVRV Ratio and Its Recent Retest
On-chain data reveals that the Bitcoin Market Value to Realized Value (MVRV) Ratio for short-term holders is currently undergoing a crucial retest. This development could have significant implications for Bitcoin’s price trajectory.
Bitcoin STH MVRV Ratio Is Retesting Its 155-Day MA Right Now
As explained by on-chain analyst Checkmate in a recent post on X, the short-term holder MVRV Ratio breaking above its 155-day moving average (MA) could trigger bullish action for Bitcoin.
Understanding the MVRV Ratio
The MVRV Ratio is a widely-used indicator that measures how the market value held by Bitcoin investors (market cap) compares against the value they initially invested (realized cap). When this metric is above 1, it indicates that the average Bitcoin address is holding a net profit. Conversely, a value below 1 suggests that losses are more dominant in the market.
Focus on Short-Term Holders (STHs)
In this discussion, the focus is on the MVRV Ratio of a specific segment: short-term holders (STHs). STHs include investors who bought their Bitcoin within the past 155 days. The MVRV Ratio for this group provides insight into the profit and loss status of these recent buyers.
Recent Trends in Bitcoin STH MVRV Ratio
The chart below illustrates the trend in the Bitcoin STH MVRV Ratio over the past few years:
Recently, the Bitcoin STH MVRV Ratio has surged as the cryptocurrency’s price has recovered. This increase has pushed the indicator just above the 1 mark, signaling a return to profitability for this cohort. More significantly, the metric is now attempting to break above its 155-day MA. Historically, whenever the STH MVRV Ratio crosses this line, Bitcoin has often experienced bullish momentum.
The last crossover occurred in the first quarter of this year, followed by Bitcoin rallying to a new all-time high (ATH). Based on past patterns, a similar bullish wave could be on the horizon if the STH MVRV Ratio successfully breaks beyond its 155-day MA. “If the bulls get their way and we set a weekly higher high around $65.3k, I would reasonably expect an attempt at the ATH,” notes the analyst.
Potential Profit-Taking Levels
However, Checkmate also cautions that profit-taking from these investors could become a factor once Bitcoin’s price reaches the $66,100 to $70,800 range. These short-term holders, who typically lack strong resolve, may be inclined to sell when they achieve notable profits at these levels.
BTC Price Movement
Bitcoin has experienced a notable jump of around 8% over the past week, bringing its price to approximately $63,700. This recent price movement adds to the significance of the ongoing MVRV Ratio retest and its potential implications for Bitcoin’s future performance.
