New Peak Period in Bitcoin: Why are MVRV Ratios Declining? Glassnode Explains - Coin Bulletin

According to the latest analysis by Glassnode, the MVRV ratio (Market Value / Realized Value), which indicates the peak prices of Bitcoin in past bull cycles, reaches lower levels in each cycle.

The decrease in speculative excesses in the markets is being attributed as the main reason for this decline with the maturation of Bitcoin.

The MVRV ratio is calculated by dividing the market value of an asset by its realized value, and it stands out as a tool used by investors to analyze the overall profit situation in the market.

According to Glassnode's report, Bitcoin's MVRV peaks, which were previously reached in previous cycles, have consistently declined since the excessive speculative movements in 2011. This indicates that the Bitcoin market has now become more balanced and mature.

Glassnode, while explaining the reason for this trend, emphasizes the change in the investor base and the mainstream adoption of Bitcoin. The entry of more institutional investors and long-term focused buyers is reducing speculative movements. However, this does not mean that Bitcoin price movements have become completely predictable.

To better understand this downward trend in the MVRV ratio, analysts use a measurement tool called Z-Score to normalize the data. This tool allows for a more accurate interpretation of the data by expressing how much the current values deviate from historical averages in terms of standard deviation units. However, even the use of Z-Score cannot change the downward trend in MVRV peaks.

According to Glassnode's report, even a new Z-Score model that analyzes shorter time periods cannot solve this "decreasing peaks" problem. This shows that Bitcoin can reach lower peak values in each new cycle, but it may have a more sustainable price movement.