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On-chain data shows that the Bitcoin Market Value to Realized Value (MVRV) ratio is doing a retest that has historically been significant for BTC. Bitcoin MVRV Ratio Is Retesting Its 365-Day SMA Right Now As explained by an analyst in a CryptoQuant Quicktake post, the Bitcoin MVRV ratio is retesting a level that has acted as an important psychological level in the past. The “MVRV ratio” here refers to a popular on-chain indicator that, in short, compares the value that the investors are holding (that is, the market cap) against what they used to purchase the cryptocurrency (the realized cap). When the value of this metric is greater than 1, it means the investors can be considered to be in profit right now. Tops can become more likely to form the higher the ratio above this mark, as holders become increasingly tempted to harvest their gains. Related Reading: Bitcoin ‘Extreme Greed’ Is Almost Here: Price Bottom Now Close? On the other hand, the indicator being under the level implies the dominance of losses in the market. Bottoms can be probable in this zone, as sellers become exhausted here. Naturally, the MVRV ratio is exactly equal to 1 suggests the investors are holding profits and losses in equal parts, so the average holder could be assumed to be just breaking even on their investment. Now, here is a chart that shows the trend in the Bitcoin MVRV ratio, as well as its 365-day simple moving average (SMA), over the last few years: As displayed in the above graph, the Bitcoin MVRV ratio has been observing a decline since the price all-time high (ATH) set back in March. This trend is because BTC has been riding on bearish momentum since then. Investor profits, which had once ballooned to relatively high levels due to the rally, have taken a sizable hit because of the price drop. However, holders are still very much in gains, as the metric’s value is around 1.8 right now. The chart shows that this is around the same level that the indicator’s 365-day SMA has been floating around recently. Historically, this SMA has acted as an important level for the indicator, sometimes taking the role of support during bullish trends. The MVRV ratio crossing below this line has often meant a transition towards a bearish trend for Bitcoin. As such, this current retest between the indicator and the line can be significant for the cryptocurrency. Related Reading: Social Media Screams “Sell” As Bitcoin Crashes To $54,000: Buy Signal? It remains to be seen if this support level holds or if the metric will drop below it, potentially leading to an extended bearish period for BTC. BTC Price Bitcoin has only slightly recovered from its latest crash so far, as its price is trading around $56,900. Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com