- MVRV ratio’s “death cross” hints at a possible bearish reversal, echoing the 2021 cycle.
- Active Address indicator, combined with moving averages, strengthens bearish market signals.
- Bitcoin’s market correction looms as MVRV and Active Address indicators align in bearish patterns.
Bitcoin (BTC) has displayed signs of a potential bearish reversal, a development that has sparked discussions within the cryptocurrency community. The primary focus is on the intersection of various momentum indicators, particularly the application of moving averages to the Market Value to Realized Value (MVRV) ratio and Active Address indicator.
The MVRV indicator is widely used to evaluate whether the market is overvalued or undervalued by comparing Bitcoin’s market value to its realized value. A key development has been observed within this metric: a “death cross” where the 30-day moving average crosses below the 365-day moving average.
Historically, this pattern is associated with bearish market trends, and its appearance now is reminiscent of the bearish reversal seen during the 2021 cycle.
The current MVRV ratio is hovering around 1.84, which is above the critical level of 1.75. If the ratio falls below this level, it may suggest that Bitcoin is overvalued, potentially leading to further downward pressure on the price.
The Active Address indicator, which tracks investor activity on the Bitcoin network, has also been integrated with moving averages to offer a clearer picture of market dynamics. Similar to the MVRV indicator, applying moving averages to the Active Address indicator has revealed patterns that align with the observed “death cross.”
This synchronization between two different indicators adds weight to the bearish signals currently emerging in the market.
The combination of these indicators presents a cautious outlook for Bitcoin, particularly as the market shows signs of consolidation or slight decline after a uptrend. The downtrend indicated by the declining arrow on the Bitcoin price chart suggests that the price may face further resistance, potentially leading to a market correction.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
