Bitcoin Magazine will look at Bitcoin’s on-chain metrics (BTC), more specifically the MVRV Z-Score, then Market Capitalization (MC) and Realized Cap (RC) to determine the direction of the coin.
MVRV is the ratio between the market capitalization and the actual capitalization of a coin. Put simply, an MVRV of 3 means that the market capitalization is three times the actual capitalization. It is used to determine a “fair” price for BTC because when the market value is well above its real value, it means that BTC is overvalued.
The MVRV Z-Score is a variation of the MVRV On-Chain Indicator. It uses the standard deviation to scale the specified scale. This is done to determine the difference between market capitalization and reality as standard deviations.
Zone 7-9 (highlighted in red) is considered an overbought zone. Above this range (black circle) all four previous market cycle highs are valid.
However, the peak in 2021 has a value of 7.63 (black arrow). At this point in time, the market was significantly less overbought than at the top of previous market cycles.
Interestingly, the MVRV Z-Score was only 3.33 despite the BTC’s all-time high again on November 10th.
This means that the real value will keep up with the market value of BTC.
The source: Glass knot
BTC market capitalization (MC) is calculated by multiplying the market price of BTC by the total number of coins mined. Realized Cap (RC) also uses a similar multiplication. Instead of the market price, however, the most recent Unspent Transaction Output (UTXO) price is used.
Hence, it can be seen as a more accurate representation of the current value of BTC as it reduces the value of coins that have not moved for a long period of time.
RC often rises during bull markets as old coins are moved to take profits. It falls during a bear market when investors reduce their losses.
RC has been growing rapidly since the beginning of March. After a pause from May to July when BTC price corrected, RC resumed its uptrend.
As mentioned above, this is a sign of a bull market.
The source: Glass knot
Compared to the market capitalization (black), the realized profit (blue) is smoother. Since BTC’s uptrend began in July, the realized cap has not fallen at all, although market capitalization has done so in the short term.
This shows that during these short-term pullbacks, investors do not sell at a loss but take profits, as is common in bull markets.
The source: Glass knot
You can see the BTC price Here.
Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews
Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.
SN_Nour
According to Beincrypto
Follow the Youtube Channel | Subscribe to telegram channel | Follow the Facebook page
Terra Shuttle Bridge has now been closed, and all remaining LUNC and USTC tokens have…
Miami, Florida, 5th November 2024, Chainwire
Want to learn about Bitcoin and Chainlink's prices? See why BlockDAG with its X1 app…
New ATH for Bitcoin’s average hashrate, combined with Bitcoin mining difficulty surpassing 100 trillion hashes,…
Bitcoin's price rose 3% to $70,200, influenced by excitement surrounding the US presidential election.
NY, United States of America, 5th November 2024, Chainwire
This website uses cookies.