Over 8% losses were recorded over the three-day period following the king coin’s 6-day recovery of 10% during the festive season. A high year-end close seemed impossible considering Bitcoin was trading at $46,750 as of the time this article was written. However, certain things have changed in this volatile year for BTC.
NYE plans for a wait
The overall retail sentiment appears to have dropped in the last few weeks as price testing has taken place at the lower bounds. This is likely due to the fact that the year’s end will be marked. Social sentiment remains low, which is usually a good sign of an asset. It aids steady price growth because people are disenchanted and still in disbelief.
BTC is currently undervalued, as both the 30-day and 7-day MVRVs suffered major losses. There is some hope for BTC if there is a short-term rebound in the same.
MVRV for the 365 days had also fallen into the negative zone. A BTC drop to $40K would be a justifiable move in terms of MVRV. There was still potential for growth.
The market is seeing younger coins, which suggests that the shake-offs have not had an impact on the more experienced and older hands. The average age of BTC spent is actually declining.
Bitcoin’s Network Profit Loss has some dips, while Exchange Inflows shows spikes in price drops. This could indicate that people are ‘panicking’ at the crash. As the sell-offs gain control, this further flushes out weak hands.
This could also indicate that participants may be fixing their profits for the year to maximize tax savings. People selling on dips are generally bearish because they believe that the price will fall in the near future.
So, what’s next?
In 2021, institutions entered the crypto market on a greater scale. This was largely due to Covid-19’s inflation hedge. BTC was seen as an inflation hedge, and as a store-of-value as it still offered over +62.56% annual returns.
The downtrend in whale entities is a worrying sign. Addresses with 100-10,000 coins were able to offload a significant amount of money. This made the market more skeptical about any moves.
With Bitcoin’s circulation falling each week since November, the number of Bitcoins being used on the network is also declining. If the NVT ratio begins to turn red, it could indicate a BTC drop towards $42K.
Despite the recent drop, the market is not buy or sell at the moment. It is HODL which allows for varying prices in the near future. Retail newcomers could enter the market if ATH reaches the threshold and triggers FOMO in 2017. For now, however, BTC’s current price movement could be continued.
