Bitcoin STH-MVRV Bear Market Signal Goes Off

Bitcoin STH-MVRV Bear Market Signal Goes Off

On-chain data shows Bitcoin short-term holder MVRV values have dipped below one. This trend has historically been a bear market signal.

Bitcoin Short-Term Holder MVRV Decline Below 1

As per the latest weekly report from Glassnode, the BTC short-term holder MVRV indicator has decreased below one. The last time a similar trend was seen was back in May when the mini-bear market period started.

The “Market Value to Realized Value” (or MVRV in short) is defined as the ratio between the market cap and the realized cap of the crypto.

The market cap here refers to the current value of the supply, and the realized cap refers to the cost basis of the coins. The indicator helps us to know whether the price of Bitcoin is currently overvalued or undervalued.

When the indicator has high values, it means that there is a huge amount of unrealized profit locked in the asset at the moment. A top formation may happen during MVRV values above 3.5 as investors become more probable to harvest their gains at such high values.

On the other hand, when the metric has values lower than 1, it implies a large part of the market is currently nearly breaking even or dipping into losses.

One of the major classes of Bitcoin holders is the “short-term holder” (STH), which includes investors that have been holding their coins since less than 155 days ago.

Here is a chart that shows the trend in the MVRV indicator for these short-term holders:

As you can see in the above graph, the STH MVRV value seems to have gone down recently, and now remains below one.

Such a trend has happened three times in the last few years. Namely, the 2018, 2019, and 2021 bear periods. Though, in 2021, the trend was more of a mini-bear market rather than a full fledged one like in the other years.

Periods of STH MVRV values below one have always been prolonged because the value 1 then starts acting as a resistance line.

The report explains that this trend could be a result of investors thinking they are “getting their money back” once the MVRV values reach 1 (as it signifies the break-even point), and so they may pull out of the market at that point, adding to the resistance.

It remains to be seen now whether a similar trend will be seen this time as well, and if it indeed does, for how long.

BTC Price

At the time of writing, Bitcoin’s price floats around $46.5k, down 1.5% in the five days.

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