Cryptocurrency analytics company Santiment, in its latest post, shed light on “overvalued” and “undervalued” cryptocurrencies.
Santiment used MVRV data to identify these altcoins. This data classifies altcoins into overvalued and undervalued zones based on the average returns of traders.
The MVRV ratio can help us see if a cryptocurrency is too expensive or too cheap compared to its normal price. The normal price is the average cost of all coins of that coin in the market. The MVRV ratio shows us how far the current price deviates from the normal price.
A high/positive MVRV ratio indicates that an asset’s market capitalization is excessively high relative to its realized value, meaning investors are holding onto unrealized profits and may be inclined to sell. Positive percentages suggest that average investors are making money, and there’s a risk of holding onto cryptocurrency due to others’ profits in a zero-sum game.
A low/negative MVRV ratio indicates that an asset’s market capitalization is lower than its realized value, meaning investors are holding onto unrealized losses and may be inclined to buy. Negative percentages suggest that the average investor is losing money, and the cryptocurrency offers an opportunity to recoup/acquire that loss.
Santiment stated that, according to the MVRV ratio, these altcoins have low MVRV ratios, namely XRP at -6.1% and Cardano (ADA) at -4.4%, indicating that their values are low but they have high growth potential.
According to Santiment, the MVRV ratio of Bitcoin (BTC) and Ethereum (ETH) is positive, indicating that an asset is overvalued and at high risk of correction.
Finally, according to the MVRV ratio, Chainlink (LINK) is in the neutral zone.
*This is not investment advice.
Source: https://en.bitcoinsistemi.com/analysis-company-santiment-evaluated-bitcoin-btc-and-four-altcoins-two-of-them-are-undervalued/
