Bearish Sign: Litecoins MVRV Surges

Bearish Sign: Litecoins MVRV Surges

The Litecoin MVRV has been at relatively high levels recently, indicating that the cryptocurrency may be overpriced, as shown by on-chain data from Santiment.

On-chain data shows the Litecoin MVRV has been at relatively high levels recently, something that may be bearish for the cryptocurrency.

Both 30-Day & 365-Day Litecoin MVRV Ratios Are High Currently

Reports by data from the on-chain analytics company Santiment, LTC traders are well over water as of now. The “MVRV ratio” is an indicator that measures the ratio betwixt the two main capitalization models for Litecoin: the market capitalization and the discovered cap.

The market capitalization here is the usual cap that calculates the total value of the investment by simply taking the value of each coin in the circulating supply the same as the present spot price.

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The discovered cap, on the other hand, is a more special model as it assumes that the actual value of any coin in circulation is the price at which it was last transacted on the blockchain.

Since this model intends to estimate a sort of “true value” for Litecoin, its comparison with the market capitalization (that is, the spot price) in the MVRV can tell us whether the asset’s price is fair or not right now.

And once the MVRV has a value more than 1, it means the market capitalization is over the discovered cap as of now. During such times, the average investor is in a state of profit, so the incentive to sell for them increases. As a result, the digital currency may be considered overpriced in these conditions.

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On the other hand,  the indicator having a value lower than this threshold implies the average holder is in a loss, and hence, the investment could be undervalued currently.

Now, here is a chart that shows the tendency in the 30-day and 365-day moving averages (MAs) of the Litecoin MVRV ratio over the last few months:

As displayed in the over graph, both the 30-day and 365-day MAs of Litecoin MVRV have risen over the baseline with the past few surge in the price beyond the $90 level. This may mean that the digital currency could have become slightly overpriced.

Prior to this surge, when LTC had been visiting some bottom Line, the 30-day version of the indicator had temporarily entered into the undervalued region. Coinciding with these values of the metric, the price formed its bottom and sooner or  thereafter built up towards the present surge.

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Back in April, the MVRV MAs showed a similar behavior as at this time, as they touched relatively high values when the investment had rallied over the $100 mark. The rally stopped before long in those overvalued conditions, and the investment took a plunge.

If a similar pattern as at that time likewise comes after with the present overpriced values of the indicator, then Litecoin may go on to observe a correction in the near future.

In the longstanding, on the other hand, the outlook of the investment could still remain positive  tendency, as the much-awaited halving event, where the cryptocurrency’s block bonus will be permanently cut in half, is gonna come in August, which is just around the corner now.

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LTC Price

At the time of publication, Litecoin is trading around $91, up 1 percent in the last week.

Litecoin Price Chart


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