Key Bitcoin Indicators Flash ‘Buy-The-Dip’ Opportunity

Yashu Gola
Published: Jul 9, 2024, 11:22 GMT+00:00

Key Points:

  • Bitcoin's 30-day and 365-day MVRV ratios are nearing negative territory, historically indicating a bullish reversal.
  • Bitcoin must break above the 200-day EMA at $58,180 to confirm a bullish trend, having recently bounced from $56,500 support.
  • Bitcoin's 8% rebound is fueled by weak U.S. unemployment data and potential Federal Reserve rate cuts, increasing risk-on sentiment among investors.
Bitcoin price prediction bullish

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A flurry of on-chain Bitcoin (BTC) indicators is hinting at “buy-the-dip” opportunities after the cryptocurrency’s recent decline to below its psychological support level of $60,000.

Bitcoin MVRV Indicators Flash Bullish Reversal Signs

First spotted by data analytics firm Santiment, these indicators track Bitcoin’s market value to realized value ratio on 30-day (short-term) and 365-day (long-term scenario).

An MVRV ratio reflects the average profit or loss of different holder groups. Therefore, when the MVRV ratio is high, it indicates most BTC holders are sitting atop profits. Conversely, when the MVRV ratio is low or negative, it shows that most BTC holders are facing losses, potentially setting the stage for a market rebound as the selling pressure diminishes.

As of July 8, Bitcoin’s MVRV ratio on 30-day and 365-day timeframes was -7.9% and +1.8%, respectively. A further decline in BTC prices will likely push the 365-day MVRV into negative territory, historically preceding a bullish reversal trend.

Bitcoin price vs. MVRV performance
Bitcoin price vs. 30- and 365-day MVRV performance. Source: Santiment

“One of the top signals for all of the crypto that @santimentfeed values is when both Bitcoin’s 30-day and 365-day MVRV are in negative territory,” explained Santiment in its X post on July 8, adding:

“This is when there is mathematical validation that you are buying relative to other traders’ pain. If you had bought the last time both of these lines were in negative territory, your return on BTC would be at +132%.”

Santiment’s bullish reversal outlook emerges as Bitcoin attempts to maintain its position above $56,500—a support level that effectively halted the cryptocurrency’s decline on May 1, leading to an approximate 26.75% rebound.

BTCUSD daily price chart
BTCUSD daily performance chart. Source: TradingView

Nonetheless, the market faces resistance at its 200-day exponential moving average (200-day EMA; the blue wave) at around $58,180. A similar trend gridlock below the 200-day EMA occurred in the August-October 2023 session (the red bar), which ultimately resulted in an 80% price rally.

Therefore, breaking above the 200-day EMA is key to validating Santiment’s bullish MVRV signals. Otherwise, the market risks deeper correction toward $50,000 or even $40,000, as indicated by top market analysts in the wake of the Mt. Gox dump fears.

Bitcoin Fundamentals Are Flipping Bullish, Nonetheless

Bitcoin’s 8% rebound despite the looming $8 billion worth of BTC sales by Mt. Gox creditors has one primary catalyst: the U.S. economy.

Notably, the BTC price started rebounding on July 5, when the U.S. Department of Labor reported underwhelming unemployment data, raising bets on the potential interest rate rise by the Federal Reserve after their September meeting.

Federal Reserve interest rate cuts
Federal Reserve interest rate cuts potential in September. Source: CME

This price rise accompanied stronger inflows into the U.S.-based Spot Bitcoin exchange-traded funds (ETF), reflecting a rising risk sentiment among Wall Street traders and investors due to the rate cut potential.

Bitcoin ETF net flows
Bitcoin ETF net flows. Source: Farside Investors

Lower rates reduce the opportunity cost of holding yield-bearing assets like U.S. Treasury notes, which drives capital toward riskier assets like stocks and cryptocurrencies.

About the Author

Yashu Gola is a journalist focusing on cryptocurrency markets since 2014. He writes for Cointelegraph and CoinChapter and has previously served as the chief editor for NewsBTC.