The MVRV (Market Value to Realized Value) indicator for Bitcoin suggests that the current bull run may continue and grow further. Does this mean that investors can expect even bigger gains?
According to an analysis published on CryptoQuant, the current phase of Bitcoin’s value recovery is not yet over. The MVRV indicator is the ratio between the market capitalization and the so-called “realized cap” of Bitcoin Realized cap is a capitalization model that takes into account the value of each coin in circulation at the price at which it was last moved on the blockchain network.
This indicator aims to find a “fair value” for the cryptocurrency. Since MVRV compares market capitalization (i.e., the normal price) with realized cap, the indicator can provide insights on whether an asset is currently overvalued or undervalued.
When the MVRV value is greater than one, it means that the market capitalization is greater than the realized cap. Such a trend suggests that the coin may be overvalued. Indicator values lower than one indicate that the cryptocurrency may currently be undervalued.
A chart showing the changes in the MVRV indicator and its 4-year moving average (MA) over the past years shows that Bitcoin’s MVRV was below 1 for most of the current bear market cycle until the increase in January of this year.
It is worth noting that the MVRV indicator has not yet approached the 4-year MA line. If previous cycles are any indication, the current phase of Bitcoin’s value recovery may also lead to exceeding this level, suggesting that the current bull run still has growth potential before reaching its peak.
