Bitcoin (BTC), the leading cryptocurrency, has caused great anxiety in the market due to its sharp and sudden decline and high volatility in recent days.
Although investors are concerned that Bitcoin’s decline will continue, CryptoQuant analysts said that Bitcoin’s on-chain indicators are strong.
Therefore, a CryptoQuant analyst with the pseudonym XVIN Research said that on-chain data does not indicate a market crash, but simply a transition period.
The analyst noted that around $1.7 billion worth of positions (mostly long positions) have been liquidated in the past 24 hours, but the foreign exchange balance continues to decline steadily.
The analyst explained that the decline in foreign exchange balances indicates a shift to self-storage rather than sales, and this pattern is consistent with market stabilization phases seen in the past.
“More than $1.7 billion of positions were liquidated in the past day, mostly due to over-leveraged long positions. Long-term investors (LTH) continue to take profits, while short-term investors face forced liquidations.”
However, foreign exchange reserves continue to trend downward, suggesting that coins are being withdrawn for safekeeping rather than sold, a behavior historically consistent with periods of stability.
Bitcoin bottom price signal!
The analyst also noted that Bitcoin’s market capitalization/realized value (MVRV) ratio is currently at 1.8, its lowest level since April.
The analyst said the ratio gives an important signal as MVRV indicates a potential accumulation zone.
Historically, a decline in the MVRV ratio between 1.8 and 2.0 generally indicates a medium-term market bottom or early recovery stage.
Bitcoin’s MVRV ratio suggests a potential bottom formation amid fear and liquidation.
Historically, when MVRV falls within the range of 1.8 to 2.0, this typically coincides with a medium-term market bottom or early recovery stage.
“…Overall, on-chain signals indicate that the market is in transition rather than in decline.”
The analyst concluded by pointing out that the overall on-chain situation is indicative of a transition period rather than a market crash, as large-scale profit taking is almost complete and stablecoin supply remains high.
*This is not investment advice.
