What’s Happening
Price Action
Over the past week, BTC slipped -3.6%, falling to just under $108K and marking its lowest level in seven weeks.
Figure 1: BTC trending down over the past week.
Currently, BTC is sitting just underneath the 128-day moving average. Bulls will want to see a quick reclaim of that level. From a pure moving average perspective, the next significant support level is the 200-day moving average, which is at $101,302 and climbing.
Figure 2: BTC and its key moving averages.
The weak price action that has been occurring for some time now is causing uncertainty in the market, as indicated by the Fear & Greed Index, which currently shows a score of 46. This is classed on the index as Fear.
Figure 3: Fear & Greed Index.
The Big Story: Are We In Value Territory Yet?
This week's big story is a continuation of our price action commentary above, as many people have been asking us questions around whether it’s over for this cycle or if BTC needs to take another leg down.
Here are three charts which give a very top-level highlight of how we see this sustained price pullback for BTC.
STH Realized Price
The STH Realized Price represents the average cost basis of newer market participants (coins held <155 days). In bull markets, price dipping into this level often highlights a buy-the-dip opportunity, as short-term holders may be capitulating as BTC price drops below their average buy-in price.
BTC is now dipping into this level. So we are now in an area that will be testing the resolve of short-term participants. As we’ve highlighted in the chart below, this has consistently offered a great value opportunity so far in this bull run. Price has rallied upwards soon after each time.
Figure 4: STH Realized Price.
Active Address Sentiment Indicator (AASI)
The AASI measures whether network activity (active addresses) is aligned with price action. When addresses grow faster than price, it signals strong sentiment; when they lag, it suggests weakness.
We have been waiting for AASI to reach the lower band. It has now just reached that level. Previous dips in this range during this cycle have marked local lows before price rebounds. Which suggests we may be near another inflection point now.
Figure 5: Active Address Sentiment Indicator.
MVRV Z-Score
Zooming out, the data suggests that this is just another pullback within the larger bull run. Therefore, dips like this may well be presenting value opportunities for investors.
The MVRV Z-Score is a great tool for understanding this.
Figure 6: MVRV Z-Score
Lyn Alden is a fan of our Bitcoin Magazine Pro charts. She summarised the market panic in this post over the weekend with the use of our MVRV Z-Score chart, to illustrate the point we are also making about the wider trend for BTC:
Even if we do get pullbacks such as the one we are currently in, the bigger trend for Bitcoin is clearly up!
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Speak again soon!
Bitcoin Magazine Pro Team.