- With the MVRV ratio above the 365-day EMA, Bitcoin enters a key bullish area
- Despite ample purchasing power, market sentiment returned to neutral
The recent volatility of Bitcoin [BTC] shows little sign of eliminating the bull market. In fact, according to CryptoQuant's market turmoil analysis, the token's market value-to-realized value (MVRV) ratio is now above its 365-day moving average (MA).
The cryptocurrency trading data platform believes that the rise is the result of a disruption in the banking sector. The MVRV ratio describes the ratio of a cryptocurrency's market capitalization to its realized market capitalization. And, it is also used to assess the valuation of assets, including market tops and bottoms.
At press time, Bitcoin's MVRV ratio is 1.13. When the indicator is below 1, it indicates that the market may have reached a bottom. Conversely, when it is above 3.7, it means that the asset is at the top of the market or overvalued.
Therefore, a breakout of the bottom by the indicator may signal a possible return to the bull market. This is because the MVRV ratio has struggled to reach current levels since the market downturn in 2022.
One of the reasons for the BTC price increase is because the crypto market has benefited from the liquidity transfer in the troubled traditional financial district. Consider – Circle's USDC stablecoin decoupled from the US dollar last week. However, the Fed's funding horizon helped push it back to $1, which would also extend the benefits to the broader market.
In addition, CryptoQuant mentioned that the decision helped BTC find support for the 1 million to 3 million age group. The indicator evaluates the holding behavior of a group by overlaying a different set of realized prices. An assessment of the indicators suggests that Bitcoin whales were restricted from selling their tokens after a temporary trade-off.
BTC is trading at $26,261 at press time, and the cryptocurrency has recovered from a drop below $25,000 more than 12 hours ago. At the time, this decline also affected the fear and greed index of cryptocurrencies, which dropped from "greedy" to "neutral".
With Bitcoin now getting rid of $26,000, more "greed" can be expected.
In addition, Glassnode's dataset shows that the stablecoin supply ratio (SSR) is currently at a low point. This indicator is used to measure the supply and demand mechanism between BTC and stablecoins.
At press time, the Bitcoin SSR is reading at 3.54. This means that there is a significant difference between the upper and lower Bollinger bands of the 200-day EMA. In short, the world's largest cryptocurrency seems to have enough stablecoin supply and purchasing power.