Bitcoin MVRV ratio falls to lowest level in three years

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Bitcoin is still at a standstill in terms of price movement and hasn’t made any significant jumps in the past two weeks. However, there might be a shift in the trajectory of the digital asset in the coming weeks as the Bitcoin MVRV ratio might signal a low signal.

Bitcoin MVRV Ratio Hits 2019 Lows

The co-founder and CEO of on-chain data analytics company Cryptoquant recently took to Twitter to share an interesting chart. The image showed that bitcoin’s MVRV ratio fell to levels not seen since 2019, three years ago.

Now, the bitcoin MVRV Ratio compares the market capitalization of BTC to its realized value. This helps determine if the digital asset is actually trading at its fair value, if it is overvalued, or if it is currently undervalued. The lower the value, the more undervalued BTC is.

The times when the BTC MVRV ratio fell to levels similar to those shown in the Cryptoquant chart were when the market bottomed out. It is during bear markets when prices drop significantly for a long period of time before bouncing back.

The MVRV ratio falls to its lowest level in 3 years | Source: Cryptoquant

Looking at the chart, it is easy to spot the times when the MVRV ratio was so low, that is when the previous low was reached. Once was in 2015 and the other time in 2019, a few months before the bull market started.

If history is anything to go by, then this chart shows that the bottom of BTC is already there or very close to it. However, based on previous timelines of when the MVRV dropped so low, it could be at least a few months before another bull market is triggered.

What to do with such tendencies

With bitcoin’s MVRV ratio being so low, it presents investors with a unique opportunity to buy the digital asset at one of the lowest possible prices before another bullish rally. BTC, so undervalued in previous years, only ended with a bullish cycle that saw its price hit a new all-time high.

Even if it is not the bottom, it can be very close to it, so investors may not suffer heavy losses even if the price ends up falling. The lack of market interest in the market has dejected investor sentiment, but it brings into play a strategy proposed by legendary investor Warren Buffett: be greedy when others are scared.

BTC is trending $16,855 at the time of this writing. It is up 0.64% in the last 24 hours and 1.21% in the last 7 days.

Follow Best Owie on Twitter for market news, updates, and the occasional funny tweet Featured Image from Medium, chart from TradingView.com

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