Leading cryptocurrency Bitcoin (BTC) entered a correction phase last week due to the release of US macro data and diminishing expectations of a Fed interest rate cut.
Bitcoin, which has fallen below $115,000 as investors’ profit-taking increases, appears to be in a “slight danger zone.”
Cryptocurrency analytics platform Santiment said that the Bitcoin Market Capitalization/Realized Value (MVRV) ratio currently stands at 21%.
Analysts at Santiment noted that this ratio suggests the average investor who purchased Bitcoin over the past year is currently in profit, which could further fuel profit-taking. This increased profit-taking could further push the BTC price down.
“Market Value/Realized Value (MVRV) ratio shows the average profit or loss of investors.
Currently, Bitcoin’s 365-day MVRV is 21%, meaning the average investor who bought Bitcoin last year is in profit.
While not at extreme historical highs, this is considered a slight danger zone as it increases the risk of profit taking.”
At this point, analysts also added that the correction that occurred after Bitcoin reached new highs is healthy and the price is likely to remain sideways or slightly down in the near term.
“Usually when Bitcoin reaches new all-time highs and begins to consolidate or enter a downward trend, investors are more inclined to take profits, fearing that the asset has reached a local price peak.”
In contrast, Santiment said that Bitcoin whales were not selling during this rally, a surprisingly bullish sign.
Analysts noted that wallets holding 10 to 10,000 BTC continued to accumulate aggressively even after the $124,000 ATH, adding, “This group purchased an additional 23,000 BTC in the last 72 hours. This shows that they believe prices will rise even further.”
*This is not investment advice.