The data indicates that Bitcoin is approaching two significant on-chart price thresholds at present. Let’s take a look back at what transpired when Bitcoin surpassed these levels in the past.
Bitcoin Is Approaching Vaulted Price & MVRV +1SD Currently
In their latest update on X, Glassnode’s on-chain expert Checkmate highlights that Bitcoin (BTC) has approached two significant price thresholds as per on-chain analysis. One such level is referred to as the “MVRV +1SD.”
This ratio measures the difference between Bitcoin’s current market worth and the amount initially paid by its holders. Essentially, it shows the profit or loss for all BTC transactions that have been realized (i.e., coins that have been sold) in the market.
Using this metric, we can assess the size of current profits or losses for the entire market. Subsequently, the coin’s price fairness can be evaluated based on this information.
In our ongoing conversation, the significance of the MVRR ratio (Moving Average Risk-Reward) deviating by one standard deviation from its average is worth noting. This means we’re interested in determining the price point where this specific MVRR ratio condition would be met in the market.
Another significant metric related to on-chain activity is referred to as “Vaulted Price.” This term was developed by Checkmate in collaboration with David Puell from Ark Invest under the “Cointime Economics” framework. Essentially, Vaulted Price is an indicator that provides insight into the long-term investment trends of Bitcoin holders.
The price level of coins stored in a vault, or “Vaulted Realized Price,” can represent the hidden value or “potential” within the system. It might seem intuitive that the longer coins are held, the clearer it becomes which coins have been permanently lost versus those still being held (“HODLed”). However, paradoxically, the greater the uncertainty arises as more time passes and more coins are accumulated. In such cases, the Vaulted Realized Price may decrease due to growing doubts about future supply distribution and increased potential for price instability (and conversely, it could increase when there is less uncertainty).
Here’s a chart displaying the development of these two indicators, along with some additional key on-chain metrics, over the last few years for your reference.
In the graph above, you’ll see that the price of Bitcoin previously surpassed the Vaulted Price and reached the MVRV +1SD level. (Please note that the labeling in the chart is incorrect as pointed out by Checkmate in their response.)
After that, the cost has decreased slightly and is now below both mentioned price points. However, it’s relatively close to these prices and significantly higher than other on-chain price indicators such as the realized price.
Based on the graph’s indication, the last instance of cryptocurrency exhibiting such a pattern was in December 2020. Subsequently, there was a significant surge or bull market in 2021.
The future is uncertain as to how Bitcoin will react when it reaches those key levels again. It’s unclear if another excited surge will ensue, possibly leading to a significant rise above those levels.
BTC Price
Bitcoin surged past $72,000 at one point, but it has since retreated and now hovers around $69,000.
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2024-04-10 05:10