Bitcoin [BTC], the leading cryptocurrency, has witnessed significant fluctuations in 2024. This year has seen Bitcoin soaring to an all-time high of $73794 in March. However, since then, it has struggled to sustain its upward trajectory, dropping to a low of $49K.
At the time of writing, BTC was valued at $55774, registering a 2.45% decline on daily charts. This continuous downward trend has been ongoing for the past month, with a 2% decline over the last 30 days.
Consequently, current market conditions have raised concerns about a potential further downturn for Bitcoin.
Addressing this, CryptoQuant analyst Yansei Dent has suggested that BTC is undergoing a bearish reversal, pointing to MVRV and Active Address indicators.
Evaluating Market Sentiment
In a recent X (formerly Twitter) post, the analyst highlighted that utilizing moving averages on MVRV and active addresses revealed a death cross formation. This pattern mirrors the bearish reversal observed in the 2021 cycle.
According to the analysis, the 30-day moving average fell below the 365-day moving average, signaling a decline in active addresses, which typically indicates a bearish outlook in the short term. The decrease in new and active addresses implies reduced on-chain activity.
Additionally, the analysis indicated that the 50-day moving average was trending downwards, although it remained below the 200-day moving average. Should the 50-day moving average dip below the 200-day moving average, it would confirm a bearish trend.
Hence, the combination of weakening active address momentum (30-day moving average below 365-day moving average) and the potential convergence of the 50-day moving average and 200-day moving average indicates an imminent short-term bearish phase in the market.
Interpreting Bitcoin’s Chart Signals
Adding to the analysis, Bitcoin’s Net Realized Profit/Loss has been in the negative territory over the past week. A negative NRPL typically signifies a bearish market phase, where investors are selling at a loss.
When investors lack confidence in the future price movements of cryptocurrencies, they tend to sell to mitigate their losses.
Furthermore, during the previous seven days, there have been four days with negative inflows from large holders. When large holders transfer their assets to exchanges, it creates selling pressure.
This behavior by whales could lead to a decline in prices, indicating a lack of belief in future prospects. The movement of large holders suggests a pessimistic outlook, with holders either anticipating lower prices or cashing out to prevent further losses.
Lastly, the whale exchange ratio for BTC has remained at an average of 50% over the last seven days. This figure indicates that 50% of the inflows into exchanges are attributed to whale activity.
When whales initiate transfers to exchanges, it signifies readiness to sell, potentially resulting in further selling pressure.
Given the current market conditions as highlighted by Yonsei Dent, there could be a potential for further decline in Bitcoin’s value.
Should prevailing market sentiments persist, Bitcoin is likely to drop towards $50670. To reverse this trend, bulls will need to maintain the $55k support level.