MV, or market value, represents the total market cap of Bitcoin — the overall capitalization of the market. RV, or Realized Value seeks to estimate the value paid for all bitcoins in existence by totaling the market value of the bitcoins at the time they last moved on the blockchain. The ratio of these two figures provides the alleged data.

1/ I expect this $BTC bull market to end in the most extraordinary epic bubble our generation has ever seen.

But how will you know when to sell?

MVRV z-score is one of the indicators I’ll use as a sell signal. pic.twitter.com/IBGb9ar9N4

— Cole Garner (@ColeGarnerBTC) September 9, 2019

Bitcoin Sell Peaks

These analysts claim that when the ratio reaches a magic number of 10, the peak has been reached and investors should sell. This number has been the point of inflection for the last four market tops, beginning in 2011.

The calculations match the peaks of the market over the life of Bitcoin because they indicate where coins are overbought. When the market value of each coin reaches a factor of 10 times greater than the realized value, the market has moved dramatically speculative. This has historically resulted in a sell-off as traders take profits.

Other Stats, Though?

While the analysis matches the market with some precision, naysayers suggest that other statistics are also in play. These other considerations could make the price break the cyclical pattern in future surges.

For example, the overall market value of the coin is tied to the dollar in the chart. Should the value of a dollar deflate dramatically, the statistic could cease to be relevant.

What’s more, the increasingly asymptotic production of new bitcoins via mining could play a role. As market supply drops off, the value of each existing Bitcoin could be more durable, allowing for a far greater ratio.

Regardless, the market has certainly followed the analysis to date. While some may cry foul, the MVRV-z indicator appears to be a strong tool in timing the top. Be that as it may, the actual moment of change may be impossible to judge with any real clarity.

Do you think this new ratio is the golden key to unlock the next profit-taking event? Is it yet another indicator that observes but cannot predict? Let us know your thoughts in the comments below! 

Buy and trade cryptocurrencies with a 100x multiplier on our partner exchange, StormGain.

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.