Bitcoin Faces Potential Downturn as MVRV Ratio Nears Critical ‘Death Cross’

A significant development has recently taken place in the MVRV ratio of Bitcoin. CryptoQuant, a well-known on-chain analytics firm, has revealed that Bitcoin’s MVRV ratio is standing within the 1.8-1.9 range, highlighting the double value of the market value in comparison with the realized value. The analytics platform took to its official social media account to discuss the analysis of the MVRV ratio’s potential implications.

MVRV Ratio Momentum at Risk of Death Cross

“In the previous cycle, after the MVRV momentum experienced a death cross, the market entered a full-blown bearish phase. Therefore, it is crucial to monitor whether the 30 DMA continues to decline. If the 30 DMA finds support at the… pic.twitter.com/jVJZ1XvP6U

— CryptoQuant.com (@cryptoquant_com) August 21, 2024

Bitcoin Sees a Likely Downturn while Its MVRV Ratio Reaches Near a Crucial ‘Death Cross’

In its recent post the CryptoQuant analyst going by “Yonsei_dent,” offered a comprehensive analysis. As per the analyst, the current spot of the MVRV ratio indicates that the market is out of severe distress. The MVRV ratio serves as an on-chain indicator that assesses the overvaluation or undervaluation of the crypto market. It reportedly draws a comparison between the market value as well as the realized value.

In this respect, it offers insights into the likely price movements and market sentiment. Although the market is not in severe distress according to the MVRV ratio, another apprehensive trend has emerged. Following touching its all-time high in March this year, the MVRV ratio’s 30-day moving average has swiftly dipped. As a result of this, it is currently meeting the 365-day moving average.

The Previous Death Cross Suggests a Potential Bearish Trend Is Looming

The respective convergence points toward a probably “death cross.” It is a technical pattern displaying the decline of a short-term moving average lower than a long-term moving average. Such a development often signals a bearish phase in the market. In the former market cycles, such death crosses led to huge bearish trends. Hence, the market prices dropped sharply. The CryptoQuant analyst asserted that the present situation specifies a gradual transfer of the supply to exclusive demand.