On-chain data indicates that the Bitcoin Market Value to Realized Value (MVRV) Ratio is on the verge of forming a death cross. The MVRV Ratio, an important Bitcoin on-chain indicator, measures how the market cap (value held by investors) compares to the realized cap (value invested by them).
When the MVRV Ratio is above 1, investors collectively enjoy net profits. Conversely, a value below this threshold signifies market losses. If the MVRV Ratio equals 1, BTC holders are breaking even, holding as much value as initially invested.
A recent chart reveals the trend of the Bitcoin MVRV Ratio alongside its 30-day and 365-day moving averages (MAs) over the past few years. Notably, these two averages have converged in recent weeks.
Back in March, the Bitcoin MVRV Ratio surged significantly when the cryptocurrency reached a new all-time high. However, as investors took profits and sold during the extended consolidation phase, the indicator has declined. Currently, it stands at 1.88, meaning the market cap is nearly double the realized cap, suggesting that investors remain relatively comfortable.
The rapid decline in the MVRV Ratio is concerning. The chart reveals a steep drop in the 30-day MA, which is now retesting the 365-day MA. Historically, when the 30-day MA crosses below the 365-day MA, it usually leads to a bearish phase for Bitcoin. The last such death cross occurred at the end of 2021, preceding the bear market of 2022.
At present, the death cross in the Bitcoin MVRV Ratio MAs is not yet confirmed. It remains crucial to monitor this indicator in the near future. If the 30-day MA continues its downward trend and falls below the 365-day MA, Bitcoin could face another bearish period. Alternatively, the indicator might reverse its course, preventing the death cross formation.
Bitcoin recently surpassed the $61,000 mark, but the surge was short-lived as the asset dropped to $59,400. Over the past few days, Bitcoin’s price has been moving sideways.
