The Market-Value-to-Realized-Value (MVRV) of Bitcoin, a metric used to evaluate whether the cryptocurrency is overvalued, suggests there is still potential for a peak in this cycle, according to a crypto analyst.
Assure DeFi CEO and crypto analyst Chapo mentioned in a February 26 X post, “I expect the peak MVRV this cycle to be around 3.2, indicating we have another bullish year in 2025 before we reach the cycle’s pico top.”
Bitcoin’s MVRV last hit this level in April 2021, coinciding with its price reaching $58,253 — which marked about a 101% increase from $28,994 at the beginning of 2021.
The MVRV is poised to “spike vertically” at market peak
“We aren’t there yet,” Chapo added. The MVRV helps indicate whether Bitcoin (BTC) is overvalued or undervalued by comparing its market capitalization to its realized capitalization.
As of the time this article was published, Bitcoin’s MVRV stands at 1.95, according to Bitbo data, while its trading price is $84,416 as per CoinMarketCap.
Bitcoin’s MVRV is currently 1.95. Source: Bitbo
Bitcoin slipped below $90,000 on February 25, shortly after US President Donald Trump announced that planned 25% tariffs on Canada and Mexico “are going forward on time, on schedule.”
Chapo explained that historically, MVRV tends to spike significantly when Bitcoin’s price is nearing its cycle peak.
“If history is any guide, MVRV will spike vertically at a market top, reaching a point where profit-taking outpaces new buying interest, thus diminishing the risk/reward for new entrants,” he noted.
Increasing MVRV indicates potential rise in Bitcoin profit-takers
When Bitcoin hit its all-time high of $109,000 on January 20, just before Trump’s inauguration, the MVRV reached 2.44.
Similarly, during its previous all-time peak of $73,679 in March, the MVRV was reported at 2.67.
As MVRV rises, it implies that an increasing number of Bitcoin holders are in profit and are more likely to take some profits. Chapo explained that when profit-takers sell to new buyers, the cost basis drops, leading to a decrease in the MVRV.
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For instance, when Bitcoin fell to $53,949 on September 7, 2024, the MVRV decreased to 1.71.
“This is a healthy sign, as new buyers are not likely to sell until they too are in profit, which calls for a higher price,” Chapo remarked.
However, CryptoQuant’s head of research, Julio Moreno, stated that the MVRV indicator suggests Bitcoin may experience further downside before resuming its upward trend.
“All valuation metrics are currently in correction territory. It may take additional time. For instance, the MVRV is below its 365-day moving average. This is a straightforward yet powerful indicator,” Moreno noted in a February 26 X post.
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This article does not provide investment advice or recommendations. Every investment and trading move carries risk, and readers should perform their own analysis when making decisions.
