Bitcoin (BTC) MVRV Ratio Drops Below Key $95,000 Price Level, Raising Concerns About the Stability of Its Rally

Since Bitcoin lost the key $95,000 price level following a weakened broader crypto market condition, several crucial aspects in its market dynamics have moved into negative territories.

Since Bitcoin lost the key $95,000 price level following a weakened broader crypto market condition, several crucial aspects in its market dynamics have moved into negative territories. The recent weakness in dynamics is particularly evidenced in the Bitcoin MVRV Ratio, raising concerns about the stability of its rally.

MVRV For Bitcoin Pulls Back Sharply

Highlighting a potential shift in BTC’s market dynamics, on-chain data and financial analytics firm Glassnode has reported a drop in Bitcoin’s Market Value to Realized Value (MVRV) Ratio.

This comes as prices are currently trading close to important support levels, while a decrease in the MVRV Ratio could indicate that the recent surge is losing steam.

The on-chain platform explained that the MVRV Ratio has pulled back to the long-term mean at the 1.74 level. This important reset level has historically been linked to periods of consolidation or corrective movement, generating questions about the current state of the market.

It is worth noting that the last time the ratio was at this level was in August last year. Like the unwind in August 2024, this drop represents a cooling of unrealized profits. However, if the critical 1.74 mark is held strongly, it might serve as a robust support zone for BTC against mounting bearish pressure as it gears up for its next leg higher.

Despite the Bitcoin MVRV Ratio suggesting a weakening market momentum, a significant portion of BTC’s overall supply is still in profit, which acts as a classic precursor to heightened investor euphoria.

This is evident as Glassnode noted that the percentage of supply in profit has climbed to 88%, with losses concentrating among buyers from the $95,000 and $100,000 price range. Usually, when most Bitcoin holders are sitting on gains, momentum picks up speed and pushes prices into parabolic territory.

Therefore, this could be a sign that a rebound is on the horizon. As the percentage of supply in profit increases, there are speculations that BTC might be entering its next euphoric rally phase. According to Glassnode, this measure also recovered from its long-term mean, suggesting a general reset of investor expectations without a widespread capitulation.

A Sign The Market Is Heading For Profit-Taking

Another crucial metric that Glassnode has highlighted amid market changes is the Bitcoin Realized Profit/Loss Ratio.

After examining this metric closely, Glassnode revealed that the Profit/Loss ratio has moved back to levels above 1.0. Typically, when the metric moves above this level, it signals a shift toward profit-taking following growing volatility, but this could be good for the market.

The rebound supports the case for recovery since it shows that demand is just at the right amount to absorb profit realization and reflects improving market sentiment, noted Glassnode.