The MVRV ratio of short-term investors in Bitcoin hints at potential upside. What’s Next for Cryptocurrency?

Technical picture:

⬆ Upward momentum
⬆ RSI is trending towards overbought
⬆ A continuation flag has been triggered on the 4-hour chart
⬆ Break above the 200 MA
⬆ Break above 23.6 FIBO

Resistances:
Resistance 1: $65,298
Resistance 2: $67,699
Resistance 3: $69,967

Supports:
Support 1: $63,809
Support 2: $60,653
Support 3: $53,511

Fundamentals:
On-chain data shows that the market value to realized value (MVRV) ratio of short-term Bitcoin holders is currently undergoing a retest that could be significant for the price of BTC.

The MVRV ratio for short-term Bitcoin holders is currently testing its 155-day moving average (MA).
As on-chain analyst Checkmate explains in a recent post on X, a breakout of the MVRV ratio of short-term holders above the 155-day moving average could lead to a bullish move for Bitcoin.
The MVRV ratio is a popular indicator that briefly tracks how the value held by investors in BTC overall (i.e., market capitalization) compares to the value they initially invested (realized capitalization). When this indicator’s value is greater than 1, it means the average address in the network can be seen as realizing a net profit at that moment. Conversely, if it is below this threshold, it suggests a dominance of losses in the market.

In the context of the current topic, the MVRV ratio of a specific segment of the sector is of interest: short-term holders (STHs). Short-term holders include investors who purchased their coins in the last 155 days. Thus, the MVRV ratio for this group provides information on the profit/loss status of buyers from the last five months.

Now, here’s a chart showing the trend in the MVRV ratio of short-term Bitcoin holders over the past few years:

Source: @Checkmatey on X

As shown in the above chart, the MVRV ratio of short-term Bitcoin holders has recently increased following the latest recovery in the cryptocurrency’s price. With this increase, the indicator has moved slightly above the threshold of 1, indicating that profits have returned for this group. More importantly, the indicator is now attempting to break above its 155-day moving average. As highlighted by Checkmate in the chart, Bitcoin typically tends to enjoy bullish momentum when the MVRV ratio of short-term holders crosses above this line.
The last time such a crossover occurred in the indicator was in the first quarter of this year, followed by an upward move of the coin to a new all-time high (ATH).

Given the previous experience, it is possible that Bitcoin may see a bullish wave again if the MVRV ratio of short-term holders manages to break above its 155-day moving average. “If the bulls achieve their targets and we establish a weekly peak around $65.3 thousand, it is reasonable to expect an attempt to reach ATH,” notes the analyst.
However, Checkmate warns that it is important to be cautious about profit-taking by these investors once the price reaches the range of $66,100 to $70,800. The reason for this is that these investors, who typically do not have strong resolve, would realize significant profits at these levels.

Source: @Checkmatey on X