• Bitcoin’s January rally has made the market profitable for the first time in months.
• Technicians view a break above the Realized Price as a signal of a meaningful shift in the market’s medium-term momentum.
• Analysts use Market Value Realized Value (MVRV) ratio to determine whether Bitcoin is reaching a top or bottom.
Bitcoin Market Returns to Profitability
The Bitcoin market has returned to profitability, with prices last at around $23,500, above the so-called “Realized Price,” which is the average BTC price when each token last moved. This signals a meaningful shift in the market’s medium-term momentum, according to technicians who view breaks above the Realized Price as an indication of upcoming changes.
MVRV Ratio: A Useful Indicator
Analysts use Market Value Realized Value (MVRV) ratio to determine whether Bitcoin is reaching a top or bottom. The MVRV ratio measures the current spot price against its realized price and presents extreme levels at 0.8 and 1.0 respectively below and above it – suggesting either an extremely weak or strong market respectively. After falling below 0.8 during FTX’s collapse last year, its recent recovery back above 1.0 indicates that this might be another sign of strength for Bitcoin’s medium-long term outlook going forward.
200 Day Moving Average
Another metric used by technicians is the 200-Day Moving Average (DMA), which Bitcoin recently broke decisively above – another sign that points towards a positive medium-long term outlook for bitcoin going forward.
Technicians also look at differentials between spot and realized prices via “price bands” plotted alongside both on charts – these show levels that are 0.8 below and 2.4/3.2 times above it respectively – which can help traders identify when things are looking especially bullish or bearish in terms of bitcoin’s long-term outlook going forward .
The return of Bitcoin to profitability suggests that analysts are increasingly bullish about its mid/long term prospects going forward – backed up by various metrics such as MVRV Ratio, 200 DMA and price bands all sending unified signals towards this direction too .