- Bitcoin investors seem to be holding tokens significantly below their acquisition cost, pointing to a bearish trend.
- Scott Minerd of Guggenheim Investments holds a pessimistic outlook, expecting BTC to drop further.
- Capitulations are tough to identify and have led to historic realized losses in Bitcoin.
Bitcoin is trading at a price further away from the average price at which coins moved on the network. The recent price action hints at a bearish trend typically aligned with capitulation events. Institutional investors are wary, suggesting BTC may drop further.
Bitcoin heads toward capitulation
Bitcoin short-term holder market value to realized value (STH-MVRV) is an indicator that removes the long-term trends from the asset's fair value. Fair value or MVRV is calculated as an asset's market capitalization divided by realized capitalization. This indicator represents a more accurate take on a short-term overvaluation and undervaluation of Bitcoin than fair value.
Notoriously accurate in confirming bull and bear markets ahead of other indicators, STH-MVRV oscillates closely around 1. Historically, the 1-line of the indicator has worked as a resistance/support line. Very low values indicate short-term holders are holding coins significantly below their acquisition cost.
During a bearish trend, this is aligned with capitulation. The value has dropped significantly; it is currently in the STH Holding Losses zone, confirming that Bitcoin is likely heading toward capitulation day.
Bitcoin: Short Term Holder MVRV
In his strategy session streamed on July 19, Tony Vays, independent Bitcoin analyst, said,
I've pretty much been somewhat bearish most of this triangle, and I remain so right now. That's because I still think that a capitulation day is coming. This capitulation day is coming soon because I also believe that the price of Bitcoin will bounce this summer and be on the way back up, breaking the all-time high later this year.
Likewise, Scott Minerd, chairman and chief investment officer of Guggenheim Investments, believes that under the technical consensus that "every time a support level is tested, it becomes weaker," the $30,000 support level may soon fail to hold Bitcoin price.
According to Steen Jakobsen, chief investment officer at Saxo Bank, the only way for Bitcoin price "to dig itself out of a hole" is with a sustainable break above $32,000.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
Is Altcoin Season here as Bitcoin reaches a new all-time high?
Bitcoin reaches a new all-time high of $98,384 on Thursday, with altcoins following the suit. Reports highlight that the recent surge in altcoins was fueled by the victory of crypto-friendly candidate Donal Trump in the US presidential election.
Shanghai court confirms legal recognition of crypto ownership
A Shanghai court has confirmed that owning digital assets, including Bitcoin, is legal under Chinese law. Judge Sun Jie of the Shanghai Songjiang People’s Court shared this opinion through the WeChat account of the Shanghai High People’s Court.
BTC hits an all-time high above $97,850, inches away from the $100K mark
Bitcoin hit a new all-time high of $97,852 on Thursday, and the technical outlook suggests a possible continuation of the rally to $100,000. BTC futures have surged past the $100,000 price mark on Deribit, and Lookonchain data shows whales are accumulating.
Shiba Inu holders withdraw 1.67 trillion SHIB tokens from exchange
Shiba Inu trades slightly higher, around $0.000024, on Thursday after declining more than 5% the previous week. SHIB’s on-chain metrics project a bullish outlook as holders accumulate recent dips, and dormant wallets are on the move, all pointing to a recovery in the cards.
Bitcoin: New high of $100K or correction to $78K?
Bitcoin surged to a new all-time high of $93,265 in the first half of the week, followed by a slight decline in the latter half. Reports highlight that Bitcoin’s current level is still not overvalued and could target levels above $100,000 in the coming weeks.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.