The 365-day Market Value to Realised Value (MVRV) model is probably the most widely used and most significant on-chain metric for Bitcoin price. This index provides insight into investor sentiment at any given time, and it can be used to calculate the average profit/loss of market participants who bought BTC in the previous year.
The main benefit of using this metric is that it can tell you when a sell-off is likely to happen. When should an investor be bullish? A value below -10% means short-term holders are selling at a loss, and here is where long-term holders tend to accumulate.
It is therefore considered an “opportunity zone” when the value is below -10%. However, a high MVRV value may also suggest that many holders are profiting and likely selling to realise their gains.
MVRV is currently near zero, meaning that investors are losing money. However, during the last four years, BTC has peaked when the MVRV reaches 24%.
Hence, there is still opportunity for BTC to rise until a sell-off threat emerges.
Source: Santiment
The supply distribution of whales holding BTC is the next key indicator that long-term investors should monitor.
Since June 2021, investors holding 1,000 to 10,000 BTC have been accumulating, and the same can be said for wallets holding 10,000 to 100,000 BTC. The number of former market participants has increased by 6.5 percent, from 2,034 to 2,166.
The number of holders with 10,000 to 100,000 BTC has grown from 78 to 85. A surge in such holders only indicates that institutions are overly optimistic and expect Bitcoin’s price to skyrocket.
The exchange net position change indicator also paints a picture of large investors’ behaviour. Since March 2022, a total of 100,000 BTCs have been transferred out of centralised entities, effectively reducing sell-side pressure.