A sudden flash crash on Friday sent cryptocurrency prices tumbling and wiped out billions in market value. Prices have rebounded since. Despite the sudden sell-off and the subsequent quick recovery, Bitcoin’s market-value-to-realized-value (MVRV) ratio continues to signal a mid-cycle expansion.
This essentially means the market remains structurally healthy and well below the overheated phase seen in prior bull runs.
Market Still in Expansion Mode
According to recent analysis shared by CryptoQuant, the MVRV ratio currently stands near 2.0, which is significantly under the historical overvaluation threshold of 4.0 that previously represented cycle peaks in 2013, 2017, and 2021. By contrast, readings below 1.0 have historically coincided with major accumulation phases such as those in 2015, 2018, and 2020.
The current mid-range level implies that most investors are sitting on profits. Despite this, sentiment has not reached euphoric extremes. Supporting the mid-cycle narrative, on-chain metrics reveal that long-term investors are holding steady and avoiding major selling activity.
In addition, steady institutional ETF inflows and a notable decline in miner selling pressure align with a maturing but still constructive market phase. In previous instances, each Bitcoin cycle has unfolded in three clear stages – recovery (MVRV <1 to 2), expansion (2 to 4), and euphoria (>4) – with the current readings closely resembling mid-2020 levels before the last major breakout.
These factors point toward a period of structural consolidation rather than the formation of a macro top.
Supply Shock Brewing
At the same time, Bitcoin’s exchange reserves have dropped to their lowest level in more than a decade. Data shows that the total Bitcoin held on centralized exchanges has fallen to approximately 2.4 million BTC, down from more than 3.5 million in 2020. This represents one of the longest and most consistent outflow trends in the flagship crypto asset’s history.
Experts believe that the continued decline in exchange-held coins reduces immediate selling pressure and potentially implies that investors are increasingly transferring their holdings to cold wallets and institutional custody solutions.
Historically, exchange reserves rose sharply between 2013 and 2018 as trading activity expanded with the growth of centralized platforms. However, since 2020, reserves have steadily decreased in tandem with rising institutional adoption, the launch of spot ETFs, and a stronger preference for long-term storage. On-chain metrics indicate that “smart money” continues to accumulate, while large-scale withdrawals suggest increasing confidence in BTC’s long-term value.
This sustained decline is similar to patterns observed before major bull runs in 2020 and 2021.
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