The on-chain analytics firm Glassnode has revealed intriguing insights regarding the potential support levels for Bitcoin (BTC) based on various pricing models. Understanding these levels is crucial for investors and enthusiasts as they navigate the volatile landscape of cryptocurrency.
Bitcoin Is Currently Retesting 1-Year MVRV Z-Score Mean
In a recent post on Twitter, Glassnode delved into Bitcoin’s performance through two significant pricing models. The first model utilizes the Market Value to Realized Value (MVRV) Z-Score, which compares Bitcoin’s market capitalization to its realized cap and applies a standard deviation analysis to identify extremes in valuation.
The term “realized cap” refers to an on-chain metric that tracks the total capital invested in Bitcoin by holders, contrasting it with the current market valuation. This juxtaposition allows for a clearer understanding of the profitability experienced by Bitcoin investors.
Glassnode’s analysis presents a detailed model employing the mean and two standard deviations (SDs) of the 1-year MVRV Z-Score to identify key Bitcoin price levels:
As illustrated in the graph, the current mean of the MVRV Z-Score is positioned at $96,300. Bitcoin’s spot price has been trading close to this level recently, indicating that the MVRV Z-Score aligns with its 1-year mean. Historically, Bitcoin has successfully recovered above this mean level after fluctuations below it. However, should it fail to maintain this position, the cryptocurrency may need to seek support from other levels.
From the chart, the subsequent potential support level in this model is calculated at $80,100, representing a deviation of -1.5 SD from its mean.
Interestingly, this isn’t the only significant support level to be aware of. In Glassnode’s second model, another historically significant line indicates a closer support threshold.
This second graph demonstrates the average cost basis (or “realized price”) of Bitcoin’s short-term holders (STHs), defined as investors who acquired BTC within the past 155 days. The realized price of STHs has frequently served as a crucial support boundary during bullish phases. Presently, this threshold is anchored at $92,000. Thus, before Bitcoin approaches the lower MVRV Z-Score pricing band, it must first contend with this pivotal level.
BTC Price
Currently, Bitcoin is trading at around $95,400, having dipped below the 1-year MVRV Z-Score mean. Observing whether this is merely a transient deviation or a more significant trend alteration will be vital for market participants.
