Bitcoin (BTC) Next MVRV Pricing Band Is Currently Valued At $79,600

An analyst has explained how Bitcoin will “likely rise to test” the $79,600 level if BTC can hold above this important level of a pricing model.

Bitcoin price has been rallying over the past couple of weeks and finally managed to breach past the key level of $60,000. At the time of writing, the coin is trading around $69,500, and an analyst has explained how BTC will “likely rise to test” the $79,600 level if it can continue to hold above this important level of a pricing model.

An analyst has recently explained how Bitcoin price is likely to head next based on an on-chain pricing model. The model itself is based on the popular Market Value to Realized Value (MVRV) indicator. This metric essentially tells us how the value that the Bitcoin investors hold right now (i.e. the market cap) compares against what they put in (the realized cap).

When the value of this indicator is greater than 1, it means that the holders as a whole are carrying a value higher than their initial investment; that is, they are in net profits. On the other hand, the MVRV being less than this threshold implies that the overall market is underwater at the moment.

There are a couple of pricing models based on this metric, but in the context of the current discussion, the “MVRV extreme deviation pricing bands” are of interest. This model uses the standard deviations around the MVRV mean to signify the relevant price levels.

Below is a chart that shows how these levels currently look for Bitcoin.

Bitcoin Price Tops Have Historically Formed Past The +1σ MVRD Pricing Band Level

As you can see from the graph, Bitcoin price is currently trading above the +0.5σ pricing band. At the price level corresponding to this 0.5σ level ($66,800 right now), BTC’s MVRV value becomes 0.5 standard deviations above its mean value.

According to this model, the next level of interest is the +1σ, where the MVRV is 1 standard deviation over its mean. The price level at which the MVRV ratio would satisfy this condition is $79,600.

Historically, tops in the cryptocurrency have tended to form when the price breaches past this MVRV pricing band level. From the chart, it’s visible that BTC already surpassed this level earlier in the year when it set its new all-time high, which continues to be the peak of the rally so far.

Ali suggests that if Bitcoin can continue to hold above $66,800 (the +0.5σ pricing band level), the asset will “likely rise to test the 1.0σ pricing band at $79,600.” A potential rally to this level would imply an increase of more than 14% for BTC from its current price.

Why do tops tend to be more probable to happen above the +1σ MVRV pricing band? The reason could lie in the fact that when the MVRV attains values this high, the investors are holding considerable profits, so they are more likely to participate in a mass selloff.