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The MVRV ratio of Bitcoin — the comparison of market value to realized value — has decreased to 1.1, indicating that the leading cryptocurrency is nearing what is referred to as the undervalued zone, according to analysts from CryptoQuant.
This indicator helps assess whether an asset is overvalued or undervalued. When the MVRV falls below 1, the asset is deemed undervalued. Undervalued assets are financial instruments whose market value is temporarily lower than their intrinsic (real) value. This suggests that the market is underestimating the asset’s potential due to temporary challenges, negative news, overall market fluctuations, or other factors.
Analysts believe the current market cycle is significantly different from previous ones. During the autumn when Bitcoin was rising, it did not enter a distinctly overvalued zone. Therefore, the current decline may not replicate the patterns of past market lows, suggesting that the drop may not be as severe, according to CryptoQuant.
“Experience shows that for most investment assets with a long-term upward trend, downturns become periods of effective preparation. It is during these times that the likelihood of favorable outcomes in the future increases,” the analysts explained.
At the same time, Bitcoin has just shown realized losses amounting to $2.3 billion. In terms of scale, this event ranks among the largest capitulation instances in BTC‘s history, noted CryptoQuant specialists. This occurrence is comparable to the 2021 crisis, the collapse of Luna and FTX in 2022, as well as the mid-2024 correction.
In the near term, Bitcoin could potentially decline by approximately 26%, from $67,000 to $50,000, suggested Geoffrey Kendrick, head of digital asset research at Standard Chartered Bank. This drop is attributed to worsening macroeconomic conditions and a decline in market sentiment.
