As a seasoned analyst with years of experience navigating the tumultuous waters of the cryptocurrency market, I find myself intrigued by Santiment’s latest analysis. The MVRV Z-Score indicator, a brainchild of Awe & Wonder built on the foundations laid by Murad Mahmudov and David Puell, has proven to be a valuable tool in deciphering market trends.
It’s possible that popular altcoins such as Shiba Inu, ADA from Cardano, and XRP might experience a rebound in the near future, according to a technical signal indicating they are currently underpriced at their current levels.
Based on the analysis of market value indicators by Santiment, a well-known data firm in the crypto space, these altcoins might experience significant price movements in the broader cryptocurrency market due to their Market Value to Realized Value (MVRV) Z-Score. This metric examines how an asset’s current worth compares to its past trading trends.
The tool in question, it seems, was developed by Awe & Wonder as an expansion on the research of Murad Mahmudov and David Puell. This tool calculates the gap between a cryptocurrency’s overall market value and its realized market value, divided by the standard deviation of the market capitalization.
The MVRV Z-score measure compares the current market value to its historical realized value, using standard deviations as a unit of measurement. A positive Z-score greater than 7 implies that the market value exceeds its historical average by more than seven standard deviations, suggesting investors might be overvaluing assets and potentially creating a speculative bubble. On the other hand, a negative Z-score below zero indicates that the current market value is less than its historical average, possibly signaling that the market is experiencing a downturn or “bleeding” capital.
📈 With cryptocurrency markets displaying strong rebound movements on a particularly bullish Friday, it’s essential to consider the average return positions of different assets.
— Santiment (@santimentfeed) July 26, 2024
Assets showing signs of possible undervaluation, as suggested by their low MVRV Z-Score, are Uniswap, Shiba Inu, Cardano, XRP, Polygon, and Chainlink. According to Santiment, these assets have endured significant losses but could surge if the market experiences a prolonged uptrend due to this potential undervaluation.
Instead, digital currencies such as Bitcoin, Ethereum, Dogecoin, and Toncoin might be considered more speculative investment options because of their higher MVRV Z-Scores, which could indicate they are overpriced.
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2024-07-30 22:55