Bitcoin’s MVRV Ratio Falls to Yearly Lows – Is This the Ultimate Buy Signal?
According to CryptoQuant, the cryptocurrency market is currently in an oversold state following a strong correction. Bitcoin holdings for less than one month saw a notable surge in March and December 2024, reaching 23% and 24.5%, respectively. This pattern coincided with a market correction that pushed Bitcoin’s Market Value to the Realized Value (MVRV) ratio to 1.8, which is alarmingly close to the 2024 crash low of 1.71.
Rebound Opportunity
Analysts suggest that if Bitcoin’s price were to decrease further to around the $70,000 mark, the MVRV ratio could reflect levels seen at the time of the correction’s lowest point. Despite this scenario, weakened market sentiment has caused altcoins to relinquish most of their recent gains, leaving a substantial number of investors without profits. This trend indicates that the market has already undergone a significant lightening of investor positions, creating conditions favorable for a rebound without necessitating additional sharp declines.
Currently, the market is navigating the latter phase of an upward cycle that is marked by heightened risk and challenging investment conditions. Nevertheless, the evident oversold condition is increasing the likelihood of a market rebound. While the current state hints at a potential recovery, CryptoQuant emphasizes that it is too early to declare the onset of a sustained bear market, as outlined in their detailed report.
“It is crucial to closely monitor the following factors: The strength and magnitude of the rebound; Whale movements and changes in on-chain data at the time of the rebound; The correlation with stock market and economic trends.”
Bitcoin’s Expanding User Base Signals
Despite the volatile market conditions, certain cohorts of Bitcoin holders have begun to accumulate assets, showcasing the resilience of some investors. The total number of Bitcoin holders—defined as non-empty wallets—has recently surpassed 54.71 million, edging closer to its all-time high of 54.72 million recorded on January 19 of this year, just 0.018% away from that milestone.
This increase is primarily attributed to two factors: network growth and larger wallets fragmenting into smaller ones. The upward trajectory in user numbers remains significant, especially considering that Bitcoin has experienced nearly eight weeks of extreme price fluctuation since reaching its $109,000 all-time high in January. The growing user base serves as a testament to the underlying strength of Bitcoin, even amid recent market turbulence.
