Altcoins At Underbought Levels Not Seen Since Early January: Santiment
09 März 2023 - 5:30PM
NEWSBTC
On-chain data from Santiment shows altcoins are currently the most
underbought that they have been since early January. Altcoins Are
Currently Underbought According To MVRV As per data from the
on-chain analytics firm Santiment, altcoins are currently in the
opportunity zone. The relevant indicator here is the “Market Value
to Realized Value” (MVRV) ratio, which measures the ratio between
the market cap of any cryptocurrency and its realized cap. The
“realized cap” here is a capitalization model for an asset that
aims to provide a “true” value for it. The model works by putting
the value of each coin in circulation as the price at which it was
last transferred on the chain. This is different from the usual
market cap, which says all coins are worth the same as the current
price of the asset. Since the MVRV compares both of these caps, it
can provide hints about whether the given cryptocurrency is
underpriced or overpriced right now. When this indicator has a
value less than 1, it means the market cap is less than the
realized cap currently, and thus the asset in question may be
underbought right now. On the other hand, values of the metric
above this threshold imply the price of the coin (the market cap)
may be overinflated when compared to its actual value (the realized
cap). This could be a sign that the asset may be due for a
correction. Now, to more easily assess the MVRV ratio, what
Santiment has done is define an opportunity and a danger zone for
the altcoins. As is apparent from their names, these zones can
provide buy and sell signals for the assets. Related Reading:
Altcoins to Buy in 2023: Orbeon Protocol (ORBN), ApeCoin (APE) and
Collateral Network (COLT) The below chart shows the divergence of
the MVRV from these zones (meaning how far the metric is from them)
for different timeframes, for various altcoins in the sector: Looks
like most of the assets are currently inside the green zone |
Source: Santiment on Twitter As you can see in the above graph, the
opportunity zone occurs above 1, while the danger zone is below -1.
This is flipped from how the MVRV usually works, and this reversal
was intentional when Santiment defined the divergence. From the
chart, it’s visible that most of the altcoins currently have their
MVRV divergence inside the opportunity zone for various timeframes
(like 1-day, 7-day, 30-day, and more). Related Reading: Bitcoin
“Social Dominance” Surges As Altcoins Struggle Historically, when
the MVRV of any asset has shown this pattern, the price has become
more likely to rise as during this condition, the coin can be
thought to be underbought. The reason behind the altcoins becoming
underpriced right now is that their prices have taken quite the
beating since this month of March kicked off. “Prices can of course
still fall further,” notes Santiment. “But this is the most crypto
assets have been in opportunity zones since early January.” BTC
Price At the time of writing, Bitcoin is trading around $21,700,
down 7% in the last week. BTC has declined over the past day |
Source: BTCUSD on TradingView Featured image from Art Rachen on
Unsplash.com, charts from TradingView.com, Santiment.net
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