The year 2024 has been marked by significant volatility in the price of Bitcoin (BTC), the leading cryptocurrency in the market. After reaching an all-time high of $73794 in March, BTC has faced challenges in sustaining its upward momentum, falling to a low of $49K.
At present, BTC is being traded at $55774, showing a 2.45% decline on daily charts. This recent drop continues a month-long trend of decreasing prices, with a 2% decrease over the past 30 days.
Given the current market conditions, doubts have arisen about the possibility of further declines in the value of Bitcoin.
According to CryptoQuant analyst Yonsei Dent, BTC might be in the midst of a bearish reversal, with a focus on indicators like MVRV and Active Address.
Analysis of Market Sentiment
In a recent X (formerly Twitter) post, Dent pointed out the occurrence of a death cross when applying moving averages to MVRV and active addresses. This pattern was observed during the bearish reversal in the 2021 market cycle.
The analysis suggests that the 30-day moving average (DMA) has fallen below the 365DMA, signaling a decline in active addresses, which is a bearish indicator for the near future. A decrease in new and active addresses implies reduced on-chain activities.
Furthermore, the examination reveals that the 50DMA is trending downward, though it remains below the 200DMA. Should the 50DMA cross below the 200DMA, it would confirm a bearish trend.
With both the active address momentum (30DMA below 365DMA) and the potential convergence of the 50DMA and 200DMA pointing towards a short-term bearish phase, market analysts are cautious about the immediate future for Bitcoin.
Interpreting Bitcoin’s Chart
More concerning is the negative trend in Bitcoin’s net realized profit/loss over the last week. A negative NRPL typically indicates a bearish phase in the market, with investors selling their assets at a loss.
When investors lose faith in the future price movements of cryptocurrencies, they are inclined to sell in order to mitigate their losses.
Additionally, four out of the last seven days recorded negative inflows from large holders. When significant investors begin transferring their holdings to exchanges, it puts downward pressure on prices.
Such actions by whales could lead to a price slump, reflecting a lack of confidence in the future direction of the market. This behavior hints at a bearish sentiment, as large holders are either expecting lower prices or choosing to cash in their profits to avoid further losses.
Furthermore, the whale exchange ratio for BTC has maintained an average of 50% over the previous week. This figure indicates that half of the funds flowing into exchanges can be attributed to whale activities.
When whales start moving their assets to exchanges, it signifies their readiness to sell, which may result in additional selling pressure in the market.
In conclusion, the current market analysis, as highlighted by Yonsei Dent, indicates a potential for further price declines in Bitcoin.
Thus, if the prevailing market sentiment endures, Bitcoin could see a drop to $50670. In order to reverse this trend, the bulls must sustain the support level around $55k.