Journalist
Posted:
- Bitcoin’s MVRV ratio showed intense long-term bullish potential.
- The average cost basis showed that there had not yet been a price jump.
Bitcoin [BTC]despite positive Year-To-Date (YTD) performance, still has enormous growth potential in the long-term. This was the opinion of a pseudonymous on-chain analyst Crazzyblockk.
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Short-term holders can’t dream now
Crazzyblockk, who regularly posts about market sentiment on CryptoQuant, orphan to the Market Value/Realized Value (MVRV) ratio to substantiate his opinion. The The MVRV ratio is calculated as the ratio of an asset’s market capitalization to its realized limit.
By comparing these two measures, the metric can be used to get an idea of when the price is above or below ‘fair value’, and to assess the profitability of the market.
Source: CryptoQuant
From the chart above, and as confirmed by Crazzyblockk, the MVRV ratio was above 1. Crazzyblockk explained how the metric relates to price and market capitalization and concluded:
“We are still above level 1 of the MVRV ratio, and on a Holders’ Cost basis, Realized Cap < Market cap.”
However, the analyst said that the optimistic long-term view does not apply short-term holders. When dealing with this part Crazzyblockk explained that there was little to no confidence in the market that sentiment could change, saying short-term holders were at a “major disadvantage.”
Watch out for $27,500
But for the medium term, the analyst said this was the case hope for relief. He also added that Bitcoin’s potential to rise above $30,000 would depend on the breakeven zone of $27,500 to $29,000.
To come to this conclusion, Crazzyblockk analyzed the state of the realized Bitcoin price. The realized price represents the average cost basis at which all Bitcoins were purchased. This is done by considering the value of all BTC at the price it last traded on the chain, divided by the number of bitcoins in circulation. So the analyst wrote:
“If we look at the average realized price of these holders or the amount of money they paid for each bitcoin, the price level of 27.5k-29k is the breakeven area of these holders’ wallets.”
Source: CryptoQuant
Read Bitcoins [BTC] Price prediction 2023-2024
In the meantime, Crazzyblockk issued a strong warning. According to him, BTC remaining lower than the above-mentioned realized prices poses a major risk to the medium-term project. He opined that the longer Bitcoin stays below $27,500, the longer the recovery could take. He explained.
“The more time we spend below these price levels, the more incentive there will be to exit liquidity from the market, and the basic condition for the return of Bitcoin’s uptrend depends on the price jump above short-term realized prices.”