According to recent on-chain analysis, Bitcoin’s MVRV ratio is flashing a potentially significant signal, suggesting the asset may be approaching a cyclical bottom. This development is particularly relevant for funds, product builders, and compliance teams as it provides a data-driven perspective on market valuation and risk assessment.
Decoding the MVRV Signal
The Market Value to Realized Value (MVRV) ratio is a key on-chain metric that compares Bitcoin’s current market capitalization to its realized capitalization. In simpler terms, it helps determine whether the network is overvalued or undervalued by measuring the average profit or loss of investors. A ratio above 1 indicates the average holder is in profit, while a value below 1 suggests widespread losses.
Currently, Bitcoin’s MVRV ratio has dipped to around 1.9, falling just below its 365-day simple moving average (SMA). Historically, this specific event has been a reliable contrarian indicator. Analyst ShayanMarkets from CryptoQuant points out that each of the three previous times the MVRV fell below its 365-day SMA, it was followed by a powerful upward trend, with Bitcoin’s price gaining between 100% and 196% afterward. This pattern suggests that the market may be purging excess speculation and entering a phase of accumulation by long-term holders, often a precursor to a new bullish phase.
Navigating Key Price Levels and Market Dynamics
While the MVRV ratio offers a strong fundamental signal, the immediate price action is being shaped by distinct technical levels and the behavior of large investors.
The area around $110,000 is a critical psychological and technical support level. A firm daily close above $116,000 is seen by many analysts as the key validation that could open a path toward the $120,000–$122,000 range and potentially trigger a new wave of institutional buying. However, this bullish potential is tempered by significant selling pressure from large wallets, often referred to as “whales”. Data indicates that addresses holding over 1,000 BTC have sent a net 147,000 BTC (worth approximately $16.6 billion) to exchanges or other buyers in recent weeks, marking the most rapid distribution by this cohort this cycle. This activity increases the risk of sharp price swings and underscores the need for robust risk management, especially for product teams who must plan for potential collateral impacts if the price were to decline toward the $93,000–$95,000 zone.
A Strategic Lens for Market Participants
For professionals navigating this market, the MVRV signal should be part of a holistic strategy rather than a standalone trigger. Its historical accuracy in identifying cycle bottoms makes it a crucial tool for timing portfolio rebalancing and entry points for long-term investors. Furthermore, the current setup suggests relative value may be emerging in other assets like Ethereum, with the ETH/BTC MVRV ratio hinting that Ethereum could be undervalued compared to Bitcoin, a situation that has preceded periods of ETH outperformance in the past.
It is also vital to acknowledge the metric’s limitations in today’s market. As noted by Presto Labs, the growth of off-chain trading on centralized exchanges, derivatives markets, and layer-2 solutions like the Lightning Network means that a smaller portion of economic activity is reflected in on-chain data. Additionally, Bitcoin’s maturation into a macro asset, held significantly by ETFs and institutions, may alter the historical interpretation of its valuation bands.
The convergence of a low MVRV ratio with heavy whale selling creates a complex but potentially opportunistic landscape. A confirmed break above key resistance could pave the way for substantial gains, with some long-term models still eyeing the $150,000–$165,000 range before the end of 2025. For now, the market presents a clear choice: guard against the immediate downside risks or position for a potential historical pattern repeating itself.
