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On-chain data shows Bitcoin MVRV is approaching a crucial retest currently. Here’s what a successful liftoff could mean for the crypto’s price. Bitcoin MVRV Ratio Is Nearing Its 100-Day EMA Line As pointed out by an analyst in a CryptoQuant post, BTC has gone on to see long-term growth whenever the metric has responded to this line before. The “MVRV ratio” is an indicator that measures the ratio between the Bitcoin market cap and its realized cap. The “realized cap” here refers to a capitalization model for BTC that assumes that each coin in the circulating supply actually has its real worth as equal to the price at which it was last moved (rather than the current BTC price, as the normal market cap says). The realized cap is often known as a fair-value model for the asset, so the MVRV tells us whether the BTC price (the market cap) is currently fair or not, by comparing the two caps of the coin. When the ratio has a value greater than 1, it means the market cap is greater than the realized cap, and hence the cryptocurrency may be overvalued right now. On the other hand, values below this threshold imply the coin may be undervalued currently. Related Reading: Dogecoin Whale Withdraws $5 Million In DOGE From Binance, Bullish Sign? Now, here is a chart that shows the trend in the Bitcoin MVRV ratio, as well as its 100-day exponential moving average (EMA), over the last few years: Looks like the value of the metric has been declining in recent weeks | Source: CryptoQuant As you can see in the above graph, the Bitcoin MVRV ratio was below 1 during the bear market lows of the past year, showing that the cryptocurrency was underpriced. With the latest rally, however, the metric has escaped from this zone and now has a value greater than 1. In the chart, the analyst has highlighted the historical bottoming zone in green and the top zone in red. Currently, while the MVRV may be showing slightly overvalued conditions, the price is still not high enough yet to hit the zone where tops have formed in the past. A curious pattern appears when looking at the indicator’s interaction with its 100-day EMA curve. It looks like whenever the ratio has retested this line from above and has successfully rebounded off it, the price of Bitcoin has gone on to enjoy some bullish trend in the long term. Related Reading: Bitcoin “Social Dominance” Surges As Altcoins Struggle Currently, as the rally has come to a stop and the price has been noticing some decline, the MVRV ratio is also going down and is now nearing its 100-day EMA line. Right now, it’s unclear if the metric will continue this trajectory and a retest will take place, but if one does and it’s successful, then Bitcoin could feel a bullish push from it if the past pattern is anything to go by. BTC Price At the time of writing, Bitcoin is trading around $22,000, down 7% in the last week. BTC continues to consolidate | Source: BTCUSD on TradingView Featured image from Kanchanara on Unsplash.com, charts from TradingView.com, CryptoQuant.com