Visionary Financial biweekly market report taking a look at both altcoins and bitcoin. Key Bitcoin fundamentals we take a look at are market value to realized value, mayer multiples and other key measurements. Along with price action, Bitcoin fundamentals have flipped the switch and appear to be flashing bullish indicators. Take a look at the full report below.
Top Cryptocurrency Performance The Last 1-Month
Market-Value-to-Realized-Value (MVRV) Ratio
Market Value: Equal to the latest price multiplied by the number of Bitcoin units outstanding. Instead of counting all the mined coins at equal, current price, Realized Value (RV) refers to the aggregated market price of all BTC UTXOs when last moved.
Realized Value: Adjusts for lost coins and coins used for “HODLING.” MVRV is calculated by dividing Market Value (aka market cap) by Realized Value (tokens outstanding x price when token last moved) on a daily basis. Two historical thresholds emerge: 3.7 (which signified overvaluation) and 1 (which signified undervaluation).
Month over Month Change: +11.8%; YTD Change: +90.5%
The current MVRV value is 1.61 and is up 22% since reaching a five month low on Oct 24. Watch to see if the ratio continues to rise following some consolidation for a signal to enter the market.
The MVRV Z-score is used to identify periods where Bitcoin is extremely over or undervalued relative to its fair value. A MVRV Z-score below 0.1 indicates that market value is significantly below realized value and signals a good long term buying opportunity. On the contrary, a MVRV Z-score above 7.5 indicates that market value is well above realized value and signals a market top is imminent.
Bitcoin’s current MVRV Z-score is 1.13 and is up 104% since reaching a five month low on October 23. The Z-score is not signalling significant under or overvaluation at the moment, but does show we are closer to the beginning of a bull market rather than the top.
Introduced by Trace Mayer as a way to gauge the current price of Bitcoin against its long range historical movements (200-day moving average), the Mayer Multiple highlights when Bitcoin is overbought or oversold in the context of longer time frames. The MM is calculated by dividing the Bitcoin price by the 200-day moving average. The MM essentially quantified the gap between the price and 200-day MA to identify points where Bitcoin enters a speculative bubble. In other words: when its price significantly exceeds its intrinsic value or points of seller exhaustion. A Mayer Multiple above 1 could be considered a sign of a bull market and below 1 could be considered a bear market. Any multiple above 2.4 threshold has historically shown to signify the beginning of a speculative bubble.
Month over Month Change: +8%; YTD Change: +64.3%
BTC’s mayer multiple reached a low of 0.84 on October 24 before rebounding to a current value of 1.04. Watch to see if the multiple finds support at the key 1.0 level for continued strength in BTC’s price action. An extended drop below 1.0 could lead to more bearish price action.
2-Year Moving Average Multiplier
The 2-year MA multiplier highlights when Bitcoin is significantly over or undervalued in the long run. When BTC is trading below the 2 year MA line, it indicates a good long term buying opportunity. When BTC is above the 2 year MA x 5 line, it indicates an impending market top.
The current value of the 2-year MA for BTC is $7788. BTC bounced off this line on October 24 and rallied to its current price of $9370. The indicator shows we are closer to the initial stages of a bull run rather than the top.
After a spike above 70%, Bitcoin Dominance was unable to hold support at 69.6% and currently sits at 69.2% (-0.5% MoM, +26.5% YTD). BTC dominance could be headed to the next support level at 66.5% if it is unable to hold the 69.6% support/resistance level.
Bitcoin Reverses Sentiment After $7,700 Bounce
In our previous market report, Bitcoin price was starting to trigger bearish indicators as it was hovering around the 100 day moving average @ $7,700. We mentioned this could be a key level when looking at the long-term price action. Dipping below that level could have fueled a bear market going off technicals and fundamentals we outlined in the previous report. Bitcoin price ended up bounding right off that level like we mentioned being a possibility. Since then it has rallied north of $9,000 and the fundamentals now appear to be much more positive.
Other Altcoin Price Action
We talked about XRP technicals in the last report as well. XRP has continued to look good on the technical side, and that’s why you see it in the top performers we outlined above the last 30 days. Aside from the technicals, XRP has also flashed some positive fundamentals. As we most recently shared on the XRP board, XRP transaction count has skyrocketed the last few days. If we look at the longer-term frame, we can see that XRP has been outperforming Ethereum since July in terms of transaction count. We could be starting to see some of the utility behind XRP rearing its head, as it’s been live with MoneyGram now for a solid amount of time. XRP positive sentiment could also be stemming from Ripples “Swell Event” which kicks off tomorrow. We will see if any material information comes to fruition from the event.
VF Market Report Authors
Jeff Guzzi (Founder): Jeff has acquired hands on experience in Portfolio Management, Venture Capital and Private Equity. Between Merrill Lynch / Edge and a mid-sized asset manager in Chicago, he earned a Series 7, Series 63 and Series 65. Jeff started investing, researching & mining cryptocurrency in 2013. He founded Visionary Financial because he strongly believes Crypto & Blockchain are going to change financial infrastructure.
Kenny Cheung (Analyst): Kenny is a senior trader at a market neutral Crypto Fund. He has worked in traditional finance with experience in fixed income trading, investment banking and equity research at bulge bracket firms including Merrill Lynch, Credit Suisse and CIBC World Markets. He holds a Bachelor of Commerce degree from the University of Toronto and has completed the Chartered Financial Analyst Program ( CFA )
Sudarshan M: (Analyst): Sudarshan is a long time crypto-enthusiast. Pulled in by bitcoin early on, it didn’t take long for Sudarshan to divert all of his academic attention from business studies to blockchain by doing his Masters and eventually pursuing his PhD in the subject. He is currently a researcher at the University of Nicosia. He is also the author of two research papers and a book on Blockchain’s future in Education titled: An Academic Overview of Blockchain - Applications in Educational Institutions. Sudarshan is an entrepreneur, blogger, educator and researcher.
Image Source: Flickr / Jason Rainman
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