On-chain data shows that the Bitcoin MVRV Ratio Triple Ribbon is approaching a bearish cross, a sign that a correction could be imminent for the crypto price.
Bitcoin MVRV Ratio Triple Ribbon is approaching the bearish crossover
As noted by an analyst in a CryptoQuant after, the MVRV ratio warns that another round of decline may be imminent for BTC. The “MVRV ratio” is an indicator that measures the relationship between Bitcoin’s market cap and the realized cap. The realized limit is a capitalization model for BTC that calculates a kind of “true value” for the asset by assuming that the true value of each coin in circulation is the price at which the specific coin last moved.
By comparing this realized limit with the market cap, the indicator tells us whether the actual price of the coin is reasonable or not at the moment. Here’s a chart showing the trend in three moving averages (10-day, 15-day, and 20-day) of this metric over the past few months:
The three MAs seem to have been closing in on each other in recent days | Source: CryptoQuant
These three MAs of the Bitcoin MVRV Ratio together make up the “Triple ribbonindicator, and crossovers between these ribbons have historically affected the price of the asset. As you can see in the chart above, when the 10-day MA has passed below both the 15-day and 20-day versions, at the same time the 20-day has gone above both others (leaving the 15-day version ). position of the day unchanged in the middle), a bearish crossover has formed for BTC.
There have been two such crosses in recent months; the first occurred in August when Bitcoin was at the height of its first relief rally from this bear market, while the other formed in November, just as the FTX crash dropped by. In both cases, the price of BTC took a deep dive after the cross formation.
The chart shows that the MVRV Ratio Triple Ribbon is once again approaching this same kind of bearish crossover as of late. If these MAs continue in this trajectory and the crossover eventually happens, it could mean crypto will soon see another sharp decline.
BTC price
Looks like the value of the asset has continued to move sideways in the last few days | Source: BTCUSD on TradingView
At the time of writing, Bitcoin’s price is hovering around $16,800, down 5% over the past week.
Featured image of Mark Basarab on Unsplash.com, Charts from TradingView.com, CryptoQuant.com