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MVRV Long/Short Difference: An Indicator of Potential Trend Reversals

@sanr_king
3 min read
02.01.2023
LTC
ADA
BNB
ETH
BTC
NFTBATTLE

The MVRV (Market Value to Realized Value) ratio is a measure of the market value of an asset compared to its realized value, which is the price at which the asset was last traded. A high MVRV ratio can indicate that an asset is overvalued, while a low MVRV ratio can indicate that it is undervalued.


Here is an example of MVRV 365 days at extreme lows:

MVRV 365 days

Below is the MVRV 60 days at only -3% in loss for the short term traders:

MVRV 60 days

If long-term traders are experiencing bigger losses than short-term traders, it is unlikely that they would sell their assets at current prices. This can lead to a lack of available sellers, or "exhaustion of net sellers," which can potentially result in upward pressure on the price of BTC.

It's also important to consider the context in which this MVRV ratio is being viewed. For example, if the MVRV ratio for the past 365 days is significantly higher, it could indicate that the asset has been in a long-term uptrend, and a -3% loss over the past 60 days may be relatively small in comparison.

The MVRV Long/Short Difference metric calculates the difference between the MVRV ratio for the past 365 days and the MVRV ratio for the past 60 days. This oscillating indicator reaches extreme negative values near the bottom of a bear market and can be a strong indication of a potential trend reversal. If the difference is positive, it indicates that the MVRV ratio for the past 365 days is higher than the MVRV ratio for the past 60 days, which could be a sign of bullish sentiment in the market. Conversely, if the difference is negative, it could be a sign of bearish sentiment.


According to the latest data(see below), the MVRV Long/Short Difference seems to have reached a bottom and is now increasing while the price of BTC drops lower. This could potentially be a strong indication of a trend reversal and a good opportunity to buy.

MVRV Long/Short Difference (BTC)

To confirm this potential trend reversal, it may be helpful to check other assets for similar indications. For example, if ETH, BNB, ADA, and LTC are also showing extreme MVRV Long/Short difference values and price divergence, this could be a sign that the trend is more widely present in the market. Checking for confluences and confirmations across multiple assets can help to provide a more complete picture of the market and increase the reliability of the trend.


MVRV Long/Short Difference (ETH)
MVRV Long/Short Difference (BNB)
MVRV Long/Short Difference (ADA)
MVRV Long/Short Difference (LTC)


Based on the confirmation from the other assets, it appears that the potential trend reversal indicated by the MVRV Long/Short Difference is more widely present in the market. This could be a good opportunity to buy, as the market may be showing signs of a trend reversal. However, it's important to remember that no single indicator is foolproof, and it is always a good idea to consider multiple indicators.


In the comments, please let me know what other indicators you would like me to analyze. Thank you.


Happy New Year!

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Featured in this Insight

Litecoin LTC

$ 118.31
8.78%
in last 7d

Ethereum ETH

$ 3635.40
-4.54%
in last 7d

Bitcoin BTC

$ 114138.88
-3.23%
in last 7d

Grayscale BTC ETF mini BTC

N/A
0%
in last 7d

Cardano ADA

$ 0.725893
-7.33%
in last 7d

BNB BNB

$ 759.98
-5.07%
in last 7d
LTC
ADA
BNB
ETH
BTC
NFTBATTLE

Conversations (6)

@M.Indrak
2 years ago

I am asking for an idea how to investigate the behavior of small investors. What can stop such a great accumulation

@M.Indrak
I am asking for an idea how to investigate the behavior of small investors. What can stop such a great accumulation
@sanr_king
Author
2 years ago

Hi, please check my new Insight regarding the behavior of small investors.

@socialtrends
2 years ago

nice summary, thanks. I normally looked at MVRV long/short diff. as a "confirmation". namely when it crossed the 0 line, it would a confirmation for both bull or bear market.

@socialtrends
nice summary, thanks. I normally looked at MVRV long/short diff. as a "confirmation". namely when it crossed the 0 line, it would a confirmation for both bull or bear market.
@sanr_king
Author
2 years ago

Yes another way to look at it. In that case, LTC is not far from a bull run ;)

@socialtrends
2 years ago

btw, aged well. we did grow from around the levels when you published. congrats!

@socialtrends
btw, aged well. we did grow from around the levels when you published. congrats!
@sanr_king
Author
2 years ago

Thank you !

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