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Amid the general market decline, 97,602 traders have liquidated in the past 24 hours, with the combined liquidation value reaching $274.73 million. The leading coin, Bitcoin (BTC), has extended its decline, slipping by 1%, while its trading volume plummeted by 20% during the same period.
Interestingly, a key on-chain metric has flashed a buy signal, suggesting an opportunity for BTC contrarian traders. However, caution is advised, as the market still faces potential downside risks.
Bitcoin Flashes Buy Signal
Bitcoin’s market value to realized value (MVRV) ratio, which measures the overall profitability of all its holders, is the on-chain metric of interest here. As of this writing, the coin’s 30-day and 90-day MVRV ratios are -0.89 and -1.48, respectively.
Generally, a negative MVRV indicates that the current market price is below the average price at which most investors acquired the asset. Therefore, if all holders were to sell their coins at the current market price, they would collectively realize a loss.
However, the metric also offers some respite. Historically, negative MVRV ratios represent a buying signal. They indicate that the market is oversold, and a potential buying opportunity could exist. A negative MVRV shows that the asset is being traded below its historical acquisition cost and may be due for a rebound.
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Some traders are already heeding the buy signal and have begun to accumulate the leading coin. Recently, there has been an unprecedented surge in new whale activity, marking levels of involvement never seen before.
“ Look at how fiercely the new whales are stacking Bitcoin; this market has never seen such accumulation,” Ki Young Ju, CryptoQuant’s founder, said in a post on X.
While this buy signal may encourage some traders to increase their BTC holdings, it’s important to note that the risk of further decline remains. The market’s buying pressure continues its downward trend, as reflected in BTC’s falling Relative Strength Index (RSI), which currently stands at 44.88.
The RSI is a key indicator of overbought or oversold market conditions. At its current level of 44.88, selling activity outweighs buying pressure among BTC holders.
BTC Price Prediction: Key Support Levels to Hold
Should selling pressure intensify, Bitcoin could approach the critical support level at $58,518. A failure by bulls to defend this price may trigger a further drop, with the next support target at $54,899.
Read more: Bitcoin (BTC) Price Prediction 2024/2025/2030
However, if market sentiment shifts from bearish to bullish, Bitcoin may reverse its trajectory, invalidating the bearish outlook. In this case, BTC could rally toward $64,367 in the near term.