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October 31, 2023

Bitcoin's Bull Market Cycle: Optimizing Returns with MVRV Ratio

Thando Dlamini
Written byThando DlaminiWriter
Researched byNikos PapadopoulosResearcher

Introduction

Crypto analytics firm IntoTheBlock has identified a key metric that suggests Bitcoin (BTC) has entered the initial stages of a bull market cycle. The market-value-to-realized-value (MVRV) ratio, which compares Bitcoin's market cap to its realized capitalization, is behaving similarly to previous bear-to-bull market transitions.

Bitcoin's Bull Market Cycle: Optimizing Returns with MVRV Ratio

The MVRV Ratio

The MVRV ratio is a measure of an asset's market cap relative to its realized capitalization. When the MVRV ratio drops below 100%, it indicates that Bitcoin is trading below the average purchasing price of its holders. Historically, bear markets have tended to bottom when the MVRV drops to 70% to 80%, presenting a buying opportunity. Conversely, when the MVRV goes back above 100% after falling below it, it signals the beginning of a bull market.

Bitcoin's Bull Market

According to IntoTheBlock, Bitcoin's bull market began in January of this year based on the MVRV ratio. If Bitcoin reaches MVRV levels of 300% or higher, similar to previous bull markets, there could be further room for appreciation. On-chain indicators also suggest that Bitcoin is in the early stages of a bull market.

Potential Variations

IntoTheBlock cautions that while previous patterns do not guarantee future returns, the alignment of positive supply and demand catalysts increases the likelihood of another Bitcoin cycle taking place.

Conclusion

In conclusion, the MVRV ratio indicates that Bitcoin has entered a bull market cycle. If Bitcoin follows historical patterns, there may be further room for appreciation. However, it is important to note that past performance does not guarantee future returns. Investors should conduct their own research and exercise caution when making investment decisions.

About the author
Thando Dlamini
Thando Dlamini
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Thando Dlamini, a vivacious 22-year-old from South Africa, seamlessly blends her love for the vibrant world of online casinos with her meticulous localization skills, making the digital gaming experience truly South African.

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