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Bitcoin MVRV Ratio At Make-Or-Break Test: Will Support Hold?

Bitcoin’s Market Value to Realized Value (MVRV) ratio is currently undergoing a crucial retest, a level that has historically held significant meaning for the cryptocurrency. The MVRV ratio compares the market cap with the realized cap, indicating whether investors are in profit or loss. When the ratio is above 1, profit-taking becomes more likely, while a ratio below 1 signifies market losses. A ratio equal to 1 suggests investors are breaking even. Currently, the MVRV ratio stands at around 1.8, indicating that investors are still in gains despite the recent price drop. However, this level coincides with the 365-day simple moving average (SMA) of the MVRV ratio, which has historically acted as support during bullish trends. If the ratio fails to hold above this SMA, it could signal a transition to a bearish trend for Bitcoin. The outcome of this retest is crucial in determining whether Bitcoin will experience an extended period of bearish sentiment. The current price of Bitcoin is approximately $56,900, with only modest recovery since the recent crash.