Chain data shows that the actual price for short-term Bitcoin holders is currently $86,800, making it the level one to watch.
Bitcoin is still a significant distance from its short-term sustaining cost basis
in a new post In X, on-chain analytics company Glassnode discusses the trend of Bitcoin's short-term profit and loss position. Link index here”Market Value to Real Value Ratio (MVRV).“, which tracks the ratio between Bitcoin's market cap and its actual cap.
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“Real hat” here refers to an on-chain investment model for digital currency where the true value of each token in circulation is the price at which the last transaction was made on the blockchain.
Since the last transfer of any coin probably corresponds to its last instance of changing hands, the price at the time can be considered as the basis of its current cost. Therefore, Realized Cap is not something, but the total amount of capital that investors have used in total to buy digital currency.
In contrast, market value represents the value that owners currently have. As the MVRV ratio compares these two models, its value tells us the profit and loss status of the network.
The traditional MVRV ratio measures this for the market as a whole, but the version of the metric of interest in the current topic is specifically for Short Term Holders (STHs)investors who bought their coins in the last 155 days.
Below is a chart shared by the analytics firm that shows the trend of the Bitcoin STH MVRV ratio over the past year:
As shown in the chart, the Bitcoin STH MVRV ratio rose to significant levels above the 1 mark when the recent rally in BTC took place. An indicator above this value indicates that the group's market cap is higher than its actual cap and, therefore, the average member is in profit mode.
Recently, as the price of digital currency has decreased, this indicator has naturally decreased. Its value remains above level 1, however, indicating that the profit retained by the group still outweighs the loss.
Currently, STH's MVRV ratio stands at 1.08, which corresponds to a group holding unrealized gains of around 8%. Historically, STHs represent the volatile side of the market that readily engages in selling, so their large gains are a risk signal for price.
The other group does not have a significant profit after the capital reduction, but perhaps if the risk of taking profit must be eliminated, the capital reduction may be needed. A metric that makes it easy to track when this happens is the “realized price,” which is derived from Cap Realized divided by the total number of tokens in circulation.
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From the chart, it can be seen that the STH Realized Price currently has a value of $86,800, which means that if Bitcoin falls to this level, the group will significantly reduce its investment.
Bitcoin price
Bitcoin briefly fell below the $92,000 level yesterday, but the coin made a small comeback as it is now trading around $94,500.
Featured image from Dall-E, Glassnode.com, chart from TradingView.com
