Bitcoin Now Undervalued For 170 Days, How Does This Compare With Previous Bears?

Keshav Verma

1 year ago

3 mins read

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On-chain data shows Bitcoin has been undervalued for 170 days now, here’s how this figure compares with that during the previous bear markets.

Bitcoin MVRV Ratio Has Been Stuck Under ‘1’ Since 170 Days Ago

As pointed out by an analyst in a CryptoQuant post, the lowest point that the MVRV ratio has gone in this bear so far is 0.74.

The “MVRV ratio” is an indicator that measures the ratio between Bitcoin’s market cap and its realized cap.

Here, the “realized cap” is a BTC capitalization model where each circulating coin’s value is taken as the price at which it was last moved/sold. All these values are then summed up for the entire supply to get the worth of BTC.

This is unlike the normal market cap, where all the coins are given the same value as the current Bitcoin price. The usefulness of the realized cap is that it acts as a sort of “real value” for the crypto as it takes into account the cost-basis of each holder in the market.

Thus, a comparison between the two caps (which is what the MVRV ratio is) can tell us whether the current BTC price is undervalued or overvalued right now.

The below chart shows the trend in the Bitcoin MVRV ratio over the last several years:

The value of the metric seems to have been below one in recent days | Source: CryptoQuant

As you can see in the above graph, the Bitcoin MVRV ratio has been under a value of 1 during the last few months, which means the market cap has been below the realized cap.

Historically, the region below 1 is where bear bottoms in the price of the crypto have been observed. On the other hand, the ratio being greater than 3.7 is when tops have been seen.

In the 2014-15 bear market, the indicator assumed values lower than 1 for 300 days, and went down to as low as 0.6 during this streak.

The 2018-19 bear saw a shorter cycle, however, as it was in this zone for only 134 days. Its lowest point, 0.69, was also not as deep as in 2014-15.

In the current Bitcoin cycle, the metric has spent 170 days in this region so far, registering a low of 0.74.

The MVRV ratio has therefore now been longer in this region than during the last cycle, but it’s still not near the length seen in 2014-15.

The metric’s depth is also not as much as in either of the cycle, so it’s possible the bear will go deeper still, before Bitcoin finds the bottom of this cycle.

BTC Price

At the time of writing, Bitcoin’s price floats around $17.2k, up 7% in the last week.

BTC has surged up | Source: BTCUSD on TradingView

Featured image from Maxim Hopman on Unsplash.com, charts from TradingView.com, CryptoQuant.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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