07 May

According to the recent weekly report from Bitfinex, there are indications that the selling pressure from short-term holders in the Bitcoin (BTC) market might be diminishing, potentially paving the way for a quicker price recovery than previously anticipated.

Pressure to Sell Bitcoin May Be Reducing

Since reaching its all-time high in March, Bitcoin (BTC) has experienced a bearish trajectory, dropping to a new local low of $56,500. One indicator suggesting that the bears are currently dominant is the notable increase in the Exchange Whale Ratio, indicating that large holders have been depositing significant amounts of BTC into crypto exchanges, potentially to sell and lock in profits.

When this ratio stabilizes, it typically indicates that long-term holders and whales have completed their distribution of supply, halting further corrections in the market.

While whales play a significant role, short-term holders often drive significant market movements. The Realized Loss metric indicates that this group of investors is currently driving selling pressure, with most of it originating from BTC held for one week to one month. Notably, Bitcoin's spot price tends to react to changes in the cost basis over one week to one month.

One metric suggesting a potential decline in selling pressure from short-term holders is the Market Value to Realized Value (MVRV) ratio for holders in the one-week to one-month range. This indicator has dropped to the 0.9 to 1 range, often observed during corrections in bull markets. Bitfinex suggests that there are signs of a local bottom forming.

Moreover, the MVRV ratio for short-term holders stands at 0.96, a level frequently seen before a market recovery. This indicates that short-term holders may be nearing exhaustion in their selling activity. 

Bitcoin Could Soon Go North

Another metric indicating a possible recovery in BTC price is the Bitcoin Fundamental Index (BFI), which assesses various aspects of the network's health, such as wallet activity and transaction volume. Presently, the index is at a turning point, implying that BTC could soon trend upwards.

"The current position of the index suggests a decline in selling pressure, coupled with network growth exceeding levels seen at previously identified market bottoms. The likelihood of a positive movement largely depends on liquidity expectations, making the forthcoming decisions of the FOMC meeting pivotal," according to Bitfinex.

May 2024, Cryptoniteuae

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