According to data, Bitcoin is currently approaching two notable on-chain price levels. Here's what happened the last time BTC broke above them.
Bitcoin is currently close to its storage price and MVRV +1SD
new post At X, Glassnode's lead on-chain analyst Checkmate points out that BTC has recently been approaching two on-chain price levels. The first of these levels is “MVRV +1SD”.
The Market Value to Realized Value (MVRV) ratio is a well-known metric for Bitcoin. In other words, it compares the value that BTC holders currently have (i.e., market capitalization) to the value they have put into the cryptocurrency (i.e., the realized cap).
This indicator is typically used to determine the size of the profit or loss that the market as a whole is currently experiencing. Based on this, the fairness of the coin's price may be determined.
In the context of the current discussion, +1 standard deviation (SD) from the mean value of the MVRV ratio is important. More specifically, we are interested in the price level at which the market satisfies this MVRV ratio.
Another on-chain level interest here is “Vaulted Price”. This indicator is a product of the “Cointime Economics” framework developed by Checkmate in collaboration with Ark Invest's David Puell. Regarding this indicator, the paper states:
Vaulted Realized Price can be thought of as a pricing level that reflects the “potential energy” stored in the system. Somewhat counter-intuitive, the longer the coin accumulation takes place, the greater the uncertainty between the proportion of supply actually lost and withheld. In this case, the stored realized price will trade lower (and vice versa) as more cointime will accumulate and there will be more uncertainty about future distribution pressures.
Here is a graph showing the trends of these two metrics and other “original” on-chain levels over the past few years.
Looks like the asset has been near these two levels in recent weeks | Source: @_Checkmatey_ on X
As shown in the chart above, Bitcoin's spot price previously broke through the vault price and reached MVRV +1SD (as Checkmate pointed out in a reply to the post, the label in the chart (note that it is incorrectly reversed).
Since then, the price has fallen a bit and is trading at both of these levels. Nevertheless, it is currently very close to them and far above other on-chain price levels such as realized prices.
As the chart highlights, the last time cryptocurrencies were in this situation was in December 2020. Obviously, what followed was the 2021 bull market.
It remains to be seen how Bitcoin will interact with these levels this time and whether a similar euphoria could follow and break through them.
BTC price
Bitcoin had previously soared above $72,000, but has since fallen again and is currently hovering around $69,000.
The price of the asset appears to have plunged over the past day | Source: BTCUSD on TradingView
Featured image by Yiğit Ali Atasoy on Unsplash.com, checkonchain.com, Charts on TradingView.com
