The high-risk level is typically witnessed during the early stages of a BTC bull market, and it shows long-term investors have returned to a “meaningful level” of profitability
On-chain indicators evaluating the value of Bitcoin have entered a “high-risk” zone and could mean the crypto currency is in the initial stages of a bull market, according to the crypto analysis platform Glassnode.
In a February 10 X post, Glassnode shared that an indicator to identify Bitcoin’s long-term valuation relative to its market value had pushed above the “mid-risk” zone and is firmly in the “high-risk” band.
The high-risk level is typically witnessed during the early stages of a BTC bull market, and it shows long-term investors have returned to a “meaningful level” of profitability, the crypto analysis platform highlighted in an earlier February 8 report.
The long-term holder market value to realized value indicator aims to identify when Bitcoin is over or undervalued relative to its “fair value.”
It contrasts the “market value” of Bitcoin with its “realized value” — the price when Bitcoin was transferred between long-term holder wallets — and it “strips out” short-term market sentiment and provides a metric that shows if the market is overheated.
The crypto analysis platform assigned a high or very high-risk rating to seven indicators out of 10, including MVRV, supply profitability state and net unrealized profit/loss, indicating that there were very low levels of realized profit locked in by investors in spite of significant increases in crypto asset prices.
Glassnode noted that demand for Bitcoin blockspace and short-term profit-taking by new investors were firmly in the “low risk” categories, adding that the sell-off after spot Bitcoin ETF approvals in the US had lowered risk throughout the wider market.
The price of Bitcoin has steadily risen over the last week, jumping from $42,317 on February 4 to $48,582 at present, per CoinGecko.