MVRV Long/Short Divergence and the cycle status

One of Santiment tools assisting in long term decisions is MVRV Long/Short Divergence.

This metric is a custom indicator built atop the MVRV ratio, a popular metric that calculates the average profit or loss across all coin holders.

In short, the MVRV Long/Short Divergence calculates the difference in the MVRV ratio of longtime holders and the MVRV ratio of ‘new money’ to identify potential deviations. You can read more on the exact methodology here.

Historically, whenever the Long/Short Divergence line crossed 0, it indicated an end of a bear cycle for Bitcoin and jumpstarted the next bull cycle.

So, where we are now?

Source: Sanbase

Oh, looks like we have just crossed 0! Bull cycle on? Not really.

In fact, we can easily go down after the first crossing, it happened in the past.

It's kind of a very long term indicator. And it doesn't work so well in ETH.

Still the strategy to use MVRV Long/Short Divergence on Bitcoin could ideally be:

  1. Wait for the metric to cross 0 from below.
  2. Expect some market crash.
  3. Green light to go long.

Once again:

  • Best for BTC
  • Only long term


Details on MVRV L/S:

@sanr_king spotting the bottom with MVRV L/S:

Thanks for reading!

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