The MVRV ratio of long-term Bitcoin holders shows an extremely bullish sign.
Original title: “Glassnode 丨 Why say that BTC is still likely to grow 10 times? 》
Written by: Liesl Eichholz
Translation: Olivia
The price of BTC has been above $19,000 from the beginning to the end of the past week, failing to exceed its recent ATH. But despite its sideways movement for most of the past few weeks, the on-chain signals are still bullish for a long time.
Bitcoin market health
After the 50th week started at $19,360, the price of BTC began to decline gradually, reaching a weekly low of $17,640 on Friday. However, after that, the price quickly began to rebound, returning to above $19,000 at the end of the week, and finally closing at $19,180.
Bull market
Bitcoin’s long-term holders MVRV ratio (LTH-MVRV) currently shows an extremely bullish sign. MVRV is the ratio of market value to realized market value, indicating when the transaction price of Bitcoin is higher or lower than the “fair value”;
LTH-MVRV is a variant of this indicator, which is used to calculate currencies with a history of at least 155 days.
When LTH-MVRV reaches the red zone (above 20), it usually indicates the top of the world. However, we can see from the figure below that Bitcoin’s LTH-MVRV is still far from the red zone.
In fact, the last time LTH-MVRV was so down during the bull market, the price of Bitcoin barely exceeded $1,000, and it still experienced a 1432% increase before peaking. If Bitcoin follows the same trend again, this will translate to over $270,000 at the top of this bull market.
Bear market
Although most of the on-chain signals are bullish, Bitcoin’s physical adjusted SOPR suggests that there may be some short-term bearish sentiment. SOPR shows the degree of profit or loss of bitcoin holders; a value higher than 1 indicates that the sales are profitable on average, and a value below 1 indicates that the sales are at a loss.
Bitcoin’s physical adjusted SOPR is still above 1, but it has been declining since late November, indicating that the amount of profit being realized is decreasing, although prices have remained relatively stable during this time.
The decline in SOPR usually indicates a decline in micro-viewing, because sellers’ profits have decreased. However, historically, this is more like a shuffle than a trend reversal. In fact, when SOPR falls in a bull market, this usually corresponds to a sideways price movement; then, when it approaches or falls below 1, this always results in an upward price correction.
Therefore, although the decline in SOPR may indicate bearish sentiment, it is actually a signal that an upward trend is approaching. Therefore, investors should pay close attention to the decline of SOPR in order to determine a potential local bottom before the next bull market.
Willy Woo’s bullish comment
Woo’s point of view: Although the possibility of an imminent correction seems high, the larger environment is the continuation of buyer demand.
Although SOPR shows that the situation is profitable now, a large number of assets have left the exchange, which shows that demand from spot buyers is still continuing. This buying pressure will be reduced, and the large downward fluctuations will also be reduced.
In other words, a big callback target like the $14,000 or even $15,500 that I have seen is unlikely. This requires some bearish changes in the chain structure, and these changes have not yet formed. From the medium-term environment (the next 3 months), we are in a stable bullish environment.
Altcoin characteristics: The amount of stablecoin locked up has increased-but its purchasing power is also increasing
After the end of UNI mining, in the past few weeks, the supply of stablecoins locked in smart contracts began to increase again. This new uptrend can be seen on USDC, USDT and DAI.
As more stablecoins are locked-usually for income farming purposes-the supply of transferable non-stable coins (such as BTC and ETH) decreases, which reduces the “purchasing power” available for these assets. However, this impact was offset by the continuous and substantial increase in the supply of stablecoins, which eventually exceeded the increase in locked-in stablecoins.
Taking USDC as an example (although this applies to all major stablecoins), we can see that the growth of the total circulating supply exceeds the growth of the supply locked by the smart contract, which means that although more stablecoins are locked , But the supply of freely available stablecoins is still increasing.
This shows that not only the DeFi field has growth (incentivizing the lock-in of stablecoins), but the number of liquid stablecoins is still growing further. In other words, even if DeFi accounts for more of the total supply, the supply of stablecoins that can be used to purchase volatile assets such as BTC and ETH continues to increase.
We are very optimistic about this trend because it means growth (and continued growth potential) in both traditional crypto trading and new forms of crypto yield generation.
Weekly Topic: Why 10 times Bitcoin is entirely possible
Last week, our CTO Rafael Schultz-Kraft (Rafael schultz-kraft) posted a post on Twitter outlining why he was “madly bullish” about Bitcoin. Focusing on some core chain indicators, he explained why “we can see more than 10 times the Bitcoin from here.”
Please note that this does not represent the official position of Glassnode, nor is it financial advice-but it is a convincing analysis.
This line covers important on-chain indicators such as MVRV, NUPL and reserve risk, and points out that their value is far below the point reached at the previous market top. This shows that BTC has a lot of room for growth before its value is overvalued, and supports the argument that the current bull market is still in the early stages.
