Bitcoin STH MVRV Would Hit 1.0 If Price Declines To $24,400
According to this week’s edition of the Glassnode , the 1.0 level of the Bitcoin STH MVRV has been a point of support for the market during uptrends in the past. The “STH” here refers to the “short-term holder group,” which is a Bitcoin cohort that includes all investors who have been holding onto their coins since less than 155 days ago.
The “market value to realized value” (MVRV) is an indicator that measures the ratio between the Bitcoin market cap and its realized cap. The “realized cap” here is a BTC capitalization model that aims to find the “real” value of the asset by assuming that the value of each coin in circulation is not the current price, but the price at which it was last moved on the blockchain.
The 7-day average value of the metric seems to have been above the 1.0 level in recent months | Source:In the graph, Glassnode has marked the lines of the 7-day average Bitcoin STH MVRV that have been relevant to the price of the cryptocurrency during the last few years.
The recent drawdown in the cryptocurrency’s price from the $30,000 mark also took place when the metric was above this level. To be more specific, the indicator had a value of 1.33 when the asset was rejected, implying that the STHs had 33% profits.
The reason that high MVRV values of this cohort have usually made a decline more probable for the price is that the higher the amount of profits that the STHs hold, the more likely they become to sell and harvest their gains. From the chart, it’s visible that the on-chain analytics firm has also marked the relevance of the 1.0 level (that is, the threshold line between profit and loss) to the cryptocurrency. Interestingly, this level has generally provided support to the price during periods of uptrend. The likely explanation behind this trend is that the 1.0 level serves as the cost basis of the majority of the STHs in the market, so when the price hits this mark, these investors look at this point as a profitable zone to accumulate more of the asset. Obviously, this behavior is only seen during rallies, as holders would only find it worthful to buy more if they think the price has the potential to grow. As the market is right now, the price would need to decline to $24,400 in order to hit this 1.0 level. This implies that if Bitcoin observes a deep decline in the near future, $24,400 could be the level that can provide support to it, considering the pattern that has held during the last few years.BTC Price
At the time of writing, Bitcoin is trading around $28,500, down 1% in the last week.Looks like BTC has seen some volatility recently | Source: