Prominent cryptocurrency analyst and influencer Murphy has provided an important explanation detailing how the supply ratio is calculated, particularly how it is monitored within 5% of the spot price. According to Murphy, this calculation is based on order book data from exchanges, which reflects the buy and sell orders available in the market, differing from the Volume Profile Visible Range (VPVR) method. The supply ratio in the cryptocurrency market indicates the volume of cryptocurrency available or circulating within a specific price range. This information is crucial for investors and traders as it helps estimate market liquidity and potential price movements. Murphy’s clarification is significant because there is confusion regarding various methodologies and data usage in the market, and this explanation can assist investors in making better decisions. Calculating the supply ratio using order book data from cryptocurrency exchanges presents a more accurate picture of the market’s real condition since it considers live buy and sell orders. In contrast, VPVR is a technical analysis tool that shows volume distribution at different price levels but does not always reflect the current order book. This explanation emerges amid the high volatility and rapid price changes in the crypto market, where investors seek every possible resource to gain better market understanding. Going forward, such insights may help reduce investment risks and improve strategy formulation in the market.
Source: binance
