One of the most popular on-chain metrics in the industry—MVRV—shows that short, mid- and even long-term trading returns are in the "pain" zone, which is historically a sign of an upcoming price reversal. The main question remains when it will happen.
The MVRV metric shows the ratio between the current price and the average price of an asset gained by an entity. With the ratio hitting high levels, more people will be looking to sell their assets because of increasing profits. The indicator allows us to determine whether the asset is overbought or oversold.
📊 One of @santimentfeed's most popular metrics, MVRV, indicates that short, mid, and long term timeframe trading returns are at 'pain' thresholds that historically foreshadow oncoming price turnarounds. When this turnaround will happen is the more challenging to identify. pic.twitter.com/65s1EPITTA— Santiment (@santimentfeed) July 2, 2022
With an MVRV value of 100%, or 2.0, investors could sell their holdings with a 100% profit on average, which is historically the exact point of a reversal on the cryptocurrency market.
According to data provided by the indicator right now, most investors are holding the asset at a massive loss regardless of how long they hold it. As for now, Bitcoin remains underbought in all timeframes and among all groups of traders.
The "technical alternative" of the MVRV indicator—the Relative Strength Index—is also showing that Bitcoin is balancing between an oversold and normal state as it could barely exit the undervaluation range and return to its regular state on the market.
For the last seven trading days, the digital gold lost 12.5% of its value because of a lack of buying power that would support a rally, which started back on June 20. Volume profiles are suggesting that the first cryptocurrency cannot show any kind of volatility since inflows to the crypto market remain at relatively low levels.
At press time, Bitcoin is changing hands at $19,160 and has lost 0.4% of its value in the last 24 hours.