Bitcoin, the world’s leading cryptocurrency, is showing signs of potential price growth. According to CryptoQuant, the expected price increase is indicated by an important market indicator called the market value to realized value ratio (MVRV), which suggests that Bitcoin prices could be on the verge of a huge recovery. The new data provides excellent market insight as well as other factors such as its use in different sectors such as real estate, e-commerce and iGaming. In the latter case, it is now even used in dedicated cryptocurrency casinos, which offer advantages such as strong security features and anonymous betting – an advantage that makes it stand out in a way that investors are very excited about. And if the signals are correct and price increases are imminent, the use of Bitcoin for the previously mentioned types of purchases could become even more common.
Understanding the MVRV indicator
Understanding the MVRV relationship is not as difficult as it seems. As an important metric used to assess the market conditions of Bitcoin, it creates a ratio comparing its market capitalization (which is calculated by multiplying its current price by the number of coins in circulation) to its realized capitalization (the total value of the coins). the price that was last used). The value of this ratio is then used by investors to assess whether Bitcoin is undervalued or overvalued in a given period.
For investors, an MVRV ratio below 1 means that Bitcoin is currently undervalued, which is a sign that there are great buying opportunities at this time. Conversely, a ratio greater than 3.7 usually means the price is overvalued, indicating that a price correction may be on the horizon.
Current market analysis
Bitcoin’s MVRV is currently hovering around 2.1, indicating that Bitcoin prices are trying to break out of their previous downtrend. What makes investors consider this scenario is the fact that previous cycles have had similar MVRV trends and have seen significant price increases shortly thereafter.
Potential price increases
MVRV is just one factor among many that could lead to the next big spike in Bitcoin prices. Another important factor is the Bitcoin whales who buy a lot of coins in the market, a factor that can play a role in the MVRV ratio, since it is only a measuring tool. We’ve seen more whale activity recently as Bitcoin addresses holding more than 1,000 BTC have seen their holdings rise to their highest level since two years ago, a sign of growing investor confidence. Since whales make large purchases when they expect the value of Bitcoin to rise, this usually has a positive effect on market sentiment and causes prices to rise.
Increased investor interest in Bitcoin ETFs could also help prices rise. The growing interest in Bitcoin ETFs is also evidenced by the significant inflow of funds into Bitcoin ETFs that have accumulated over the past few weeks in the US as their value has surpassed $2 billion. The capital inflows proved renewed market optimism, which could push bitcoin prices even higher as more investors gain exposure to the cryptocurrency through these investment vehicles.
Additionally, positive market sentiment will always play an important role in Bitcoin prices. Fortunately, investors have a metric to gauge market sentiment—the Fear and Greed Index, which measures market sentiment. This index recently jumped to 74, which shows that the market is positive about Bitcoin, which could lead to an uptrend.