Know When to Sell Your Bitcoin with This On-Chain Indicator: CryptoQuant
By Andrew Throuvalas
As the crypto bull market continues, a widely used on-chain metric suggests that it’s still too early for investors to consider selling their Bitcoin, according to a report by CryptoQuant.
The market intelligence firm recently published a quick take on its research, analyzing whether Bitcoin is approaching a “distribution zone” or market peak, or if current prices still present a good buying opportunity for investors.
The Ultimate Indicator: MVRV
According to authorized analyst Tarek On-Chain, there is only one indicator that long-term investors should consider in the current market. The MVRV (Market Value to Realized Value) indicator provides highly accurate alerts for Bitcoin price tops and bottoms.
The Bitcoin MVRV indicator is a well-known on-chain metric that measures the ratio between Bitcoin’s market cap and its “realized cap.”
The market cap is a familiar financial metric that represents the total value of all circulating Bitcoin based on its current market price. On the other hand, the realized cap calculates the value of all coins based on the last time each coin moved on-chain.
MVRV is often used to gauge the potential profit that Bitcoin investors are holding, assuming that the realized price of each coin equals the price at which a specific buyer entered the market. For example, a ratio of 2.0 signifies that the average coin has doubled in value since it was last purchased.
CryptoQuant advises against selling Bitcoin at the moment. Throughout Bitcoin’s history, the MVRV indicator has almost always remained above 1.0, except during the bear market of late 2022. According to Tarek, values below 2.0 generally indicate that Bitcoin is in an accumulation zone and is still undervalued.
On the other hand, bull cycle peaks usually occur when the value exceeds 3.5, indicating that the network has generated 250% profits. As unrealized profits increase, long-term holders who have made substantial gains are more likely to start cashing out.
Currently, Bitcoin’s MVRV score is 2.3.
“This means that we are still quite far from the peak, and the price will reach a new high in this cycle, potentially surpassing $100k,” wrote Tarek. “Selling should only begin when the indicator approaches a value of 3.”
In its latest weekly report, CryptoQuant also reassured bulls about the Mt. Gox bankruptcy. Mt. Gox recently started moving coins on-chain in preparation for creditor repayments. However, the firm stated that there is no immediate selling pressure from these movements since the transfers occurred within the addresses of the same entity and are not yet available on the open market.
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