- Bitcoin’s MVRV ratio showed intense bullish potential for the long term.
- The average cost basis revealed that a price jump was not there yet.
Bitcoin [BTC], despite having a positive Year-To-Date (YTD) performance, still has a massive potential for growth in the long term. This was the opinion of pseudonymous on-chain analyst Crazzyblockk.
Is your portfolio green? Check the Bitcoin Profit Calculator
Short-term holders can’t dream now
Crazzyblockk, who posts regularly about the market sentiment on CryptoQuant, pointed to the Market Value to Realized Value (MVRV) ratio as grounds for his opinion. The MVRV ratio is calculated as the ratio of an asset’s market capitalization versus its realized cap.
By comparing these two metrics, the metric can be used to get a sense of when the price is above or below “fair value”, and to assess market profitability.
From the chart above, and as confirmed by Crazzyblockk, the MVRV ratio was above 1. Explaining how the metric relates to the price and market cap, Crazzyblockk concluded:
“We are still above level 1 of the MVRV Ratio, and based on the Holders’ Cost basis, Realized Cap< Market cap.”
However, the analyst mentioned that the bullish long-term picture does not apply to short-term holders. In addressing this part, Crazzyblockk explained that there was little to no confidence in the market that could change the sentiment, saying that short-term holders were at a “huge disadvantage.”
Watch out for $27,500
But for the mid-term, the analyst mentioned that there was hope for relief. He also added that Bitcoin’s potential to rise above $30,000 would depend on the $27,500 to $29,000 break-even zone.
To arrive at this conclusion, Crazzyblockk analyzed the state of the Bitcoin realized price. The realized price gives the average cost basis at which all Bitcoins were purchased. This is done by considering the value of all BTC at the price they were last transacted on-chain, divided by the number of bitcoins in circulation. So, the analyst wrote,
“If we look at the average realized price of these holders or the amount of money they have paid for each bitcoin, the price levels of 27.5k-29k is the break-even area of these holders’ pockets.”
Read Bitcoin’s [BTC] Price Prediction 2023-2024
In the interim, Crazzyblockk gave a strong warning. According to him, BTC remaining lower than the aforementioned realized prices poses a great risk to the mid-term project. He opined that the longer Bitcoin stays lower than $27,500 the longer it might take to recover. He explained that.
“The more time we spend below these price levels, the more incentive there will be to exit liquidity from the market, and the basis condition for the return of the upward trend of Bitcoin depends on the price jump above the short-term realized prices.”