Bitcoin Market Resets as MVRV Ratio Hits Long-Term Mean, Signaling Consolidation Phase

Bitcoin is entering a very important phase of recalibration. It is one of the most popular cryptocurrencies, and its critical on-chain metrics are signaling a possible stabilization after recent volatility.

The recalibration is reflected in the popular Market Value to Realized Value (MVRV) Ratio, which most recently has pulled back to its long-term mean of 1.74.

The MVRV Ratio compares Bitcoin’s current market cap with the worth of all coins at the prices they were last moved. When this ratio is significantly above its mean, it usually signifies that unrealized profits are high and that the market is in a bubble. Thus, the recent pullback seems to reflect a reduction in these paper profits, making for a healthier market structure post-bubble.

88% of Bitcoin Supply Still in Profit

Recent price corrections notwithstanding, an astonishing 88% of total Bitcoin supply is still in the green. Most holders, therefore, are still sitting on gains compared with their acquisition price, which is a testament to the resilience of the market. For now, losses appear to be largely contained within a narrow group of recent buyers—specifically, those who bought in at the peak, between around $95,000 and $100,000. These late-cycle participants are currently underwater.

It is perhaps more important to note that the profit-to-loss positioning of Bitcoin supply has rebounded from its long-term mean. This development indicates that the broad reset of investor expectations has happened without a triggering of any mass exodus or capitulation by the investor class. In prior downturns, lots of losses meant lots of panic, lots of selling, and lots of steep decline. The current situation seems to indicate that participants are making price-adjustment trades rather than fleeing the space altogether.

Profit-Taking Returns as Sentiment Improves

Another layer of optimism is being added to the current prospects by the movement in the Realized Profit/Loss Ratio, which has climbed back above 1.0. This metric tracks the realized profits of market participants versus the realized losses that they have taken. When this ratio is above 1.0, it means that our profits are being taken. In contrast, when this ratio is below 1.0, it means that we are not locking in our profits and, thus, not realizing them in a mathematical sense.

This increase represents a move back toward profit-taking actions—a behavior we associate with improving investor sentiment. It also implies that the market is absorbing this selling pressure quite comfortably without going lower. In essence, it reflects a return to confidence among investors. When investors feel confident enough to take profits without causing a further drop in price, that confidence acts like a strong support level for price recovery.

These main metrics converging—the MVRV ratio returning to its long-term mean, a high percentage of supply still in profit, and the rebound of the Realized Profit/Loss ratio—looks like a recalibrating rather than a collapsing market. This is a market working its way through a consolidation phase—”watching and waiting”—where it may be tough to generate anywhere near the amount of excitement that a parabolic rally might yield.

The Bitcoin market may continue to evolve in many different directions. Thus, what we are watching most intently—almost breathlessly—right now is whether these levels can hold as support. If they do, and it is too early to tell quite yet, they may serve as the springboard for the next bull run. If they don’t, no one seems to wish to speculate too much on what might happen next.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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