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This Bitcoin Metric Is in "Pain," Which Hints at Potential Reversal

Sat, 07/02/2022 - 19:30
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Arman Shirinyan
Long-awaited reversal on cryptocurrency market could be around the corner according to this metric
This Bitcoin Metric Is in "Pain," Which Hints at Potential Reversal
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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.

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.

BTC, BNB, ADA and MATIC Price Analysis for July 1

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.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.