Altcoins
85% of Altcoins in the “Opportunity Zone,” Santiment Reveals
On-chain analytics firm Santiment has revealed that over 85% of all altcoins in the sector are currently in the historic “opportunity zone.”
MVRV suggests most Altcoins are poised for a rebound
In a new job on X, Santiment explained what the altcoin market looks like based on his MVRV ratio model. THE “Market Value to Realized Value Ratio (MVRV)” is a popular on-chain indicator that compares the market capitalization of Bitcoin to its cap made.
Market capitalization here is the usual total valuation of the circulating supply of the asset based on the current spot price. At the same time, the latter is an on-chain capitalization model that calculates asset value by assuming that the “true” value of any coin in circulation is the last price at which it was transferred on the blockchain.
Since a coin’s last transaction would likely have been the last time it changed hands, the price at that time would serve as the current cost basis. As such, the realized cap essentially summarizes the cost basis of each token in the circulating supply.
Therefore, one way to look at the model is to measure the total amount of capital that investors have invested in the asset. On the other hand, market capitalization measures the value that holders carry.
Since the MVRV ratio compares these two models, its value can indicate whether Bitcoin investors are holding more or less than their total initial investment.
Historically, when investors have made high profits, tops have become likely to form because the risk of profit taking may increase during such periods. On the other hand, loss dominance could lead to the formation of a bottom as selling pressure exhausts in the market.
Based on these facts, Santiment defined an “opportunity” and “danger” zone model for altcoins. The chart below shows what the market currently looks like from the perspective of this MVRV model.
The data for the MVRV divergence for the various altcoins | Source: Santiment on X
In this model, when the MVRV divergence for an asset over a certain time frame is greater than 1, the coin is considered to be in the bullish opportunity zone. Likewise, if it is below -1, it suggests that it is in the bearish danger zone.
The chart shows that the MVRV divergence for much of the market is currently in the opportunity zone. As the analytics company explains,
Over 85% of the assets we track are in a historical opportunity zone when calculating market value to realized value (MVRV) of collective portfolio returns over 1 month, 3 month and 6 cycles month.
So, if the model is to be adopted, now might be a good time to do some altcoin shopping.
ETH Price
Ethereum, the largest among altcoins, saw a 3% rise over the past week, which took its price to $3,150.
Looks like the price of the asset has gone up over the last few days | Source: ETHUSD on TradingView
Featured image from Shutterstock.com, Santiment.net, chart from TradingView.com