Key Takeaways:
- Bitcoin’s MVRV metric has further room to drop, says the editor of AcheronInsights.com.
- The Fibonacci retracement levels might confirm the dip ahead.
- Whale accumulation colled off, supporting the analyst’s claim.
YEREVAN (CoinChapter.com) – Bitcoin (BTC) traded at just over $39,100 on Mar. 14, after weeks of sideways consolidation.
However, Christopher Yates, the editor and publisher of AcheronInsights.com, asserted that the alpha crypto would further drop to $30,000 before it was time to ‘buy the dip.’ Additionally, the expert underscored three main reasons why BTC won’t give Bitcoin bulls much to celebrate just yet.
#1 Bitcoin MVRV still has room to drop
In detail, the Market Value/Realized value, or MVRV Ratio, is an on-chain metric that compares Bitcoin’s current Market Value to its ‘fair’ value. The latter is calculated using standard deviation, which pulls out the extremes in the data between Market Value and Realized Value.
Furthermore, the Market Value (MV) reflects the current price of Bitcoin multiplied by the number of coins in circulation. On the other hand, realized Value (RV) does not consider the current BTC price. Instead, RV takes the price of each Bitcoin when it was last moved, i.e., the last time it was sent from one wallet to another wallet.
The indicator then adds up all those individual prices and calculates their average. Finally, that average price, not the current price, is multiplied by the total number of coins in circulation. As a result, the price peaks and the MVRV spikes typically appear together. Thus, on-chain analysts use MVRV to identify the bull market tops and bottoms.
Also read: Bitcoin trend on Google drops amid its most crucial safe haven test.
As Mr. Yates pointed out, the indicator stood at approximately 1.50 on Mar. 14, while the cycle bottom is typically at 1.0 or lower (green zone on the chart below).
Clearly, there is still room for this ratio to fall further to the downside, with readings below one generally considered to be excellent long-term buying opportunities. Such an outcome is possible this year and would be very opportunistic.
noted the expert.
#2 61.8% Fibonacci retracement at $30,000
The analyst evoked a technical indicator, “Fibonacci retracement,” to back the on-chain analysis results. In detail, the Fib retracement indicates approximate price levels where the current trend might change. Empirically, the most significant levels seem to be 38.2%, 50%, and 61.8%.
As Mr. Yates noticed, “what makes the $30k area even more important from a technical perspective is this level is roughly equal to the 61.8% Fibonacci retracement of the entire bull run off the March 2020 lows.” Thus, if BTC cannot hold on to the $30,000, it could plunge further to $20,000 (78.6% level), with “no support in between.”
Also read: WTF Bitcoin! BTC price drops towards $38K after U.S. inflation hits four-decade high.
Moreover, the expert asserted that such a drop would be consistent with previous bear markets, despite being “painful.”
#3 Bitcoin whales on the move
In detail, whales are wallets with large amounts of a particular coin. Thus, typically, whale accumulation inspires “much positivity,” as they tend to set the trend for the market. Moreover, long-term buyers activated in Jan. and Feb. 2022 after the BTC price tanked below $40,000.
Mr. Yates further asserted that retail investors should carefully watch the whales, or the “smart money, ” and buy when they’re buying. The infographic from the analytical platform Ecoinometrics confirmed the Jan. – Feb. accumulation (red dots).
Also read: Institutional exposure to BTC products attained new heights in Feb ―Arcane Report.
The platform further noted that the whale accumulation in the recent days cooled off while the retail investors doubled down (light blue dots).
As a result, the graph above confirms Mr. Yates’ conclusions that Bitcoin hasn’t bottomed out yet, and it’s still early to buy the dip.
