Brace For Impact: Bitcoin MVRV Triple Ribbon Again Forms Bearish Cross

Keshav Verma

1 year ago

3 mins read

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On-chain data shows the Bitcoin MVRV triple ribbon has once again formed a signal that has lead to an average of 30% decline during previous instances this year.

Bitcoin MVRV Triple Ribbon Shows Bearish Signal Formation

As pointed out by an analyst in a CryptoQuant post, the latest trend in the BTC MVRV triple ribbon may suggest the crypto will observe another local drawdown soon.

Before looking at what “MVRV” is, it’s best to first take a look at the two major types of capitalization methods for Bitcoin.

The first cap, the usual market cap, is calculated by multiplying each coin in circulation with the current BTC price (or more simply, it’s just the total number of coins in circulation, multiplied by the price).

Where the other capitalization model, the “realized cap” differs is that instead of all the coins being weighted against the latest value of the crypto, each coin is multiplied by the BTC price that was there at the time of the coin’s last movement.

Now, MVRV is just the ratio between these two Bitcoin caps (market divided by realized). Historically, this metric has indicated when the value of BTC has been undervalued, and when it has been overvalued.

Here is a chart that shows the trend in three different MVRV moving averages (10-day, 15-day, and 20-day) during the last few months:

Looks like the 10-day MA curve is passing under the 15-day MA line | Source: CryptoQuant

These three moving averages of the indicator together form the “MVRV triple ribbon.” And as you can see in the above graph, the trend in this triple ribbon has had some interesting implications on the Bitcoin price during the last few months.

Whenever the 10-day MA has crossed below the other two MAs, the price of the crypto has observed a sharp decline in the near term.

In this year so far, each of these MVRV triple ribbon crossovers has resulted in a 30% average drawdown for the value of BTC.

From the chart, it’s apparent that this pattern once again seems to be forming for the indicator. If this is indeed the same signal as the previous occurrences, then Bitcoin may face more fall in the near future.

BTC Price

At the time of writing, Bitcoin’s price floats around $21.2k, down 12% in the past week. Over the last month, the crypto has lost 9% in value.

The below chart shows the trend in the price of the coin over the past five days.

The value of the crypto seems to have plunged down a few days back | Source: BTCUSD on TradingView

Featured image from Thomas Bonometti 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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