Bitcoin is free-falling, and numbers don’t lie.
The world’s most valuable coin is down 22% from its all-time high and 20% from its May 2024 high.
What’s more, today’s losses mean the coin is down 8% week-to-date, forcing a sell-off across the board.
According to CoinMarketCap, the impact of BTC’s sell-off, considering its dominance, has seen the total market cap drop by 4% to around $2.16 trillion.
While the trend favors bears, at least looking at today’s performance, all is not lost.
Glassnode: Don’t Be Afraid, Bitcoin Ready To Bounce
According to Glassnode, the market is priming for a big move up.
A leading on-chain metric that may help assuage traders is the development in the Market Value Realized Value (MVRV) chart.
So far, the MVRV data shows that many BTC holders are still in profit even with the current dump.
Of note, Glassnode added, the average BTC investor is up 2X, even at spot rates. Meanwhile, the average acquisition price per BTC for all active investors is $50,000, a round number that traders must watch.
Therefore, even with the worrying sell-off–just after an extended consolidation that saw prices move inside the $60,000 to $70,000, the market is within the “Enthusiastic” phase of a bull run.
Once this phase clears, it will pave the way for the “Euphoric” phase, setting in motion sharp price expansions as Bitcoin jumps into the “Banana zone.”
BTC Volatility And Sell-Side Risk Ratio At Record Lows, Options Traders Stack Their Bullish Bets
Beyond the MVRV, analysts are also looking at volatility compression and sell-side risk ratio data.
Considering the multi-week consolidation after prices peaked at $73,800, it is understandable that volatility is decreasing.
So far, on-chain data reveals a level of compression never seen before in Bitcoin’s 14-year history.
At the same time, the sell-side risk ratio, which measures profitability relative to holding among short-term holders (STHs), is at record lows, suggesting that the market is stable.
To Glassnode, however, decreasing volatility is not necessarily bad. In fact, looking at history, Bitcoin’s volatility tends to fall before prices expand lower or higher.
As things stand, whether the upside will resume largely depends on whether BTC holds at spot levels or whether, if prices tank, $50,000 will anchor buyers.
Currently, looking at the Bitcoin options market, QCP analysts think the future is bright.
In their view, the sell-off is accelerated by the expectations of the Mt. Gox distribution, which was pushed from October to July. It remains to be seen whether victims will sell at spot rates.
Some analysts think Mt. Gox victims were crypto natives and would look to HODL and won’t sell.
Still, once the unfounded Mt. Gox bearish sentiment clears, BTC will edge higher, explaining the heavy skew towards puts–or bullish bets.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
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