How To Buy Bitcoin Low? Santiment Says Watch This Metric

The on-chain analytics firm Santiment has revealed a Bitcoin indicator that could be to watch when looking to buy low or sell high.

30-Day Bitcoin MVRV Ratio Could Help Spot Market Reversals

In a new post on X, Santiment has discussed about buying low and selling high in relation to Bitcoin. “When looking to buy low (or sell high), don’t just look at prices… Look at how competing traders have performed,” says the analytics firm.

An indicator that allows us to gauge trader performance is the Market Value to Realized Value (MVRV) Ratio. The MVRV Ratio keeps track of the ratio between the amount of value that the investors as a whole are holding (that is, the market cap) and the amount that they initially put into the asset (the realized cap).

In other words, the metric tells us about whether the BTC investors as a whole are sitting on profits or losses. When the indicator’s value is greater than 1, it means the average holder could be assumed to be in the green. On the other hand, it being under the mark implies the the majority of the market is underwater.

The traditional form of the MVRV Ratio tracks the entire network, but in the context of the current topic, a version of the metric that only focuses on a specific segment of the market is of interest.

The segment in question is the 30-day one, which includes the addresses or investors that bought their coins within the past month. Here is the chart shared by Santiment that shows the trend in this Bitcoin MVRV Ratio over the last few months:

The value of the metric appears to have gone down in recent days | Source: Santiment on X

Note that in the chart, the 30-day Bitcoin MVRV Ratio is shown as a percentage, with the 0% mark taking the role of the 1 level. As is visible, this version of the metric has plunged recently alongside the crash in the cryptocurrency’s price.

At the time that Santiment shared the post, the indicator was sitting at -1.9%, but as BTC has continued to plummet since then, the value is bound to be even more negative now.

The indicator’s value naturally suggests the investors who bought during the last 30 days are in the red now. This could prove to be an opportunity to buy, as the analytics firm explains:

With this metric averaging 0% over the history of Bitcoin trading (due to markets being a zero-sum game), consider every percentage point into the negatives as an indication that there is an ‘opportunity’ to buy while other positions are at a loss.

From the chart, it’s apparent that the indicator also dipped into the the negative territory back in October. As we all know, Bitcoin went on a historic rally from this point.

BTC Price

At the time of writing, Bitcoin is trading around $95,100, down more than 7% over the last 24 hours.

Looks like the price of the coin has been witnessing bearish momentum recently | Source: BTCUSDT on TradingView

Featured image from Dall-E, Santiment.net, chart from TradingView.com