Is Bitcoin Price In Bearish Phase? Here’s What The MVRV Ratio Says

The
Bitcoin
price
began
Friday,
August
16
from
beneath
the
$57,000
level,
following
a
sudden
7%
fall
on
Thursday.
While
the
premier
cryptocurrency
is
showing
good
signs
of
recovery,
a
prominent
crypto
analyst
has
explained
how
the
latest
price
decline
may
have
pushed
the
BTC
price
into
a
bearish
phase.

Bitcoin
MVRV
Drops
Below
1-Year
SMA
–
Impact
On
Price?

In
a
post
on
the
X
platform,
popular
crypto
analyst
Ali
Martinez
shared
that
the
Bitcoin
price
has
experienced
a
shift
in
its
cycle
following
the
latest
price
dip.
This
on-chain
revelation
is
based
on
the
Glassnode
MVRV
(Market
Value
to
Realized
Value)
Momentum
indicator,
which
serves
as
a
tool
for
identifying
macro
market
trends.

The
MVRV
Momentum
indicator
primarily
consists
of
the
MVRV
ratio
and
the
1-year
simple
moving
average
(SMA).
When
the
MVRV
ratio
breaks
above
this
SMA,
it
indicates
a
transition
into
the
bull
market.
Meanwhile,
a
break
below
the
1-year
simple
moving
average
signals
a
shift
to
the
bearish
phase.

Typically,
strong
breaches
above
the
MVRV
1-year
SMA
suggest
that
large
volumes
of
Bitcoin
were
acquired
below
the
current
price,
showing
that
the
holders
are
now
in
profit.
On
the
flip
side,
when
there
is
a
strong
break
beneath
the
moving
average,
it
indicates
that
large
volumes
of
BTC
were
purchased
above
the
current
price,
with
the
holders
in
the
red.

A chart showing the Bitcoin price and the MVRV momentum indicator | Source: Ali_charts/X

According
to
Martinez,
the
BTC
cycle
transitioned
to
a
bearish
phase
after
the
Bitcoin
price
slumped
below
$61,500.
This
latest
significant
break
of
the
MVRV
ratio
beneath
the
SMA
shows
that
a
significant
amount
of
BTC
was
acquired
above
$61,500.
However,
the
coins
are
now
in
loss,
which
may
potentially
lead
to
heavy
distribution
by
investors
who
want
to
cut
back
their
losses.

When
a
large
number
of
investors
are
in
the
red,
there
is
an
increased
pressure
to
sell,
which
could
put
further
downward
pressure
on
the
Bitcoin
price.
Ultimately,
this
could
lead
to
a
situation
where
falling
prices
result
in
more
asset
offloading,
thereby
strengthening
the
momentum
of
the
bearish
phase.

Bitcoin
Price
At
A
Glance

As
of
this
writing,
the
price
of
Bitcoin
continues
to
hover
around
$59,000,
reflecting
a
2.5%
increase
in
the
past
24
hours.
Nevertheless,
the
premier
cryptocurrency
is
down
by
nearly
3%
on
the
weekly
timeframe,
according
to
data
from
CoinGecko.

The price of Bitcoin hovers around the $59,000 level on the daily timeframe | Source: BTCUSDT chart on TradingView

Featured
image
from
iStock,
chart
from
TradingView