Bitcoin (BTC) is a unique asset on the global financial scene. This is because the transparent nature of the blockchain makes it possible to gather a lot of information about the cryptocurrency. We can always see how much bitcoin is in circulation and much more. Today we take an indicator that has often succeeded in predicting a bottom in the past.
Is the Bitcoin Bottom Here?
It is about the Market Value to Realized Value (MVRV) of bitcoin. This indicator shows a relationship between the market value of bitcoin based on the current price and the Realized Value, which is the average price at which all bitcoin last changed addresses. If you divide those numbers together, you get a ratio. The higher the current price is relative to the average, the higher the number.
Usually you see that this number increases enormously during bull markets. At those times, this ratio logically peaks. Now if suddenly one bitcoin sells for $100,000, while the Realized Price is at $20,000, there would be a score of 5.0 on the boards.
In that sense, it can teach us to what extent there is hype and when to expect a possible bottom. In the past, bitcoin formed the bottom when the score of this indicator fell below 1.0. We’ve been under that for a while now, but the question is, of course, for how long.
The first recession with bitcoin
It is also questionable to what extent the data is reliable. Bitcoin may be entering a global recession for the first time in its life. That is the moment when bitcoin has to prove itself as a store-of-value, as a safe haven in uncertain times. Recessions are normally the times when many investors flee to gold, but now bitcoin is there as an alternative.
So, anyway, we are entering an exciting few months for bitcoin and the crypto market in general. If there is a recession, the question is how the projects will be able to hold up. In principle, this can really stand out in all directions at the moment.