The recent performance of Bitcoin has shown a troubling trend, as the cryptocurrency continues to face downward pressure. Entering February, Bitcoin experienced a significant decline, breaking through crucial psychological price points, including the cost basis for a key group of investors—the Bitcoin ETF holders.
Recent on-chain analysis indicates that Bitcoin has been trading below this critical threshold, leaving investors increasingly anxious. Market analyst PelinayPA, in a discussion on QuickTake, highlighted that the current Bitcoin price has dipped beneath the average realized price of Bitcoin ETFs, suggesting potential implications for the market.
The ETF MVRV (Market Value to Realized Value) index has now fallen below the level of 1, which historically indicates a growing level of stress within the Bitcoin market. This scenario typically reflects a significant prevalence of unrealized losses among investors. PelinayPA points out that this situation could amplify sell-pressure, as market participants may act out of emotion when managing their investments.
Consequently, any attempts at short-term recovery are likely to encounter substantial resistance. Investors who purchased Bitcoin at higher price levels may opt to sell their holdings at break-even points or minimal losses to prevent deeper financial setbacks. Given that the realized price of Bitcoin ETFs hovers around $80,000, this range could serve as a formidable resistance if Bitcoin endeavors to rebound.
PelinayPA further notes that if the MVRV stabilizes between 0.8 and 0.9, it could indicate that the current bearish pressure is nearing its limit, potentially leading to a short-term recovery towards the realized price. However, if the MVRV continues its downward trajectory, which the analyst anticipates, it could pose a significant threat to Bitcoin“s price stability.
The ongoing pressure on ETFs could incite a wave of sell-offs among this investor group, thereby exacerbating downward trends and creating further challenges for the long-term price of Bitcoin.
As of the latest data, Bitcoin is priced at $68,000, reflecting a slight increase of 1.58% over the past 24 hours, according to information from CoinMarketCap. Additionally, data from SoSoValue reveals that Bitcoin ETFs have experienced a total net outflow of approximately $1.08 billion in February, following a staggering net withdrawal of $1.61 billion in January.
