Several altcoins including the meme-inspired cryptocurrency Shiba Inu, Cardano’s native token ADA, and XRP could soon bounce back based on a key technical indicator suggesting these cryptocurrencies are currently undervalued.
According to on-chain analytics firm Santiment, these altcoins could soon see wide cryptocurrency market values based on their Market Value to Realized Value (MVRV) Z-Score, a metric that compares an asset’s current valuation to its historical trading patterns.
The indicator was reportedly created by Awe & Wonder building on the work of Murad Mahmudov and David Puell, and measures the difference between the cryptocurrency’s total market capitalization and its realized market capitalization divided by the standard deviation of the market cap.
The MVRV Z-score indicator shows by how many standard deviations the market value differs from the realized value. It indicates whether investors are making a profit, with scores above 7 suggesting a high probability a bubble has formed, while scores below zero suggest the market is bleeding.
Assets with a low MVRV Z-Score, indicating potential undervaluation, include Uniswap, Shiba Inu, Cardano, XRP, Polygon, and Chainlink. While these assets experienced the “most pain”, Santiment argues they could be primed for a rebound if the market enters a sustained uptrend.
On the other hand, assets like Bitcoin, Ethereum, Dogecoin, and Toncoin are flagged as potentially riskier investments due to their high MVRV Z-Scores, suggesting overvaluation.
Featured image via Pixabay.
