Bitcoin Returns Show Similarity to Late 2022 Levels, According to Santiment

Santiment, an on-chain analytics firm, has pointed out that Bitcoin's average returns for buyers over the past year closely resemble those seen in late 2022.

Key Takeaways

Santiment reports that Bitcoin's average returns for buyers over the past year are similar to late 2022.
The 365-day MVRV Ratio for Bitcoin has recently dropped to -26.6%, indicating potential investment opportunities.
The 30-day MVRV Ratio is at +2.8%, suggesting slight profits for short-term investors.
The current Bitcoin price is approximately $70,500, down nearly 1% over the last week.

Bitcoin

Bitcoin MVRV Ratio Shows Recent Decline

In a recent update on X, Santiment discussed the current trend regarding Bitcoin’s Market Value to Realized Value (MVRV) Ratio. This important on-chain metric gauges the ratio of the asset's market capitalization to its Realized Capitalization.

Realized Capitalization is a valuation model calculating the total worth of the cryptocurrency, assuming that each circulating token's "real" value equals the price it was last traded for on the blockchain. Essentially, this metric sums up the capital held in the asset by all investors.

Comparing the market cap—representing present investor holdings—with Realized Cap within the MVRV Ratio provides insights into the overall profit or loss status of the network. If the metric's value exceeds 1, it indicates that investors are in a situation of net unrealized loss. Conversely, a value below 1 signifies a prevailing state of losses.

For the discussion at hand, rather than focusing on the entire market's MVRV Ratio, the emphasis is placed on two specific investor groups: buyers over the last 30 days and those from the past year. Their MVRV Ratios give an indication of the average returns for these coins.

Below is the chart shared by Santiment, illustrating the trend of the 30-day and 365-day MVRV Ratios for Bitcoin over recent years:

Bitcoin MVRV Ratio

As shown in the chart, the 30-day MVRV Ratio for Bitcoin currently stands at +2.8%, indicating that short-term buyers are experiencing slight profits. Although this may heighten the likelihood of profit-taking sell-offs, the returns are not significant enough to classify within the “Danger Zone,” according to the analytics firm.

However, the situation differs for one-year investors. The chart reveals that the MVRV Ratio for this group has dropped to -26.6%, a significant decline putting it well into what is referred to as the “Opportunity Zone.” Interestingly, the last time this indicator reached such a low point was at the conclusion of the 2022 Bitcoin bear market. Santiment noted, “When the 365-day MVRV was severely negative following the FTX collapse, $BTC subsequently increased by +67% in the next three months.”

Though the current MVRV value indicates a similar situation to that of late 2022, its context resembles mid-2022 more closely, since the metric has only recently declined to these levels, whereas it was on an upward trend in late 2022.

Current Bitcoin Price

As of now, Bitcoin's price is hovering around $70,500, showing a nearly 1% decrease over the last week.

Bitcoin Price Chart
The price of the cryptocurrency has seen an upward trend recently | Source: BTCUSDT on TradingView