Key Points
- Bitcoin’s price may drop to $31k due to its realized price-to-liveliness ratio.
- Historically, a drop below this ratio precedes further price declines.
Bitcoin [BTC] investors have been facing challenges as the cryptocurrency’s value continues to decrease. A recent analysis suggests a possible larger price drop in the future.
Bitcoin’s Potential Drop to $31k
According to CoinMarketCap’s data, Bitcoin experienced approximately a 7% price drop last week. The past 24 hours have also shown a bearish trend, with a marginal decline in BTC’s price. Currently, BTC is trading at $54,306.75 with a market capitalization of over $1 trillion.
Data from IntoTheBlock shows that after the latest price correction, over 41 million BTC addresses were in profit, accounting for 77% of the total number of Bitcoin addresses. Meanwhile, a crypto analyst pointed out a significant difference between BTC’s price and its realized price-to-liveliness ratio. Historically, when BTC’s price falls below this ratio, it has led to further price declines.
The Likelihood of Bitcoin Remaining Bearish
Given the historical pattern, it seems probable for BTC to drop if history repeats itself. Other datasets also suggest a possible correction. For instance, BTC’s investor capitalization has increased substantially. In the past, when BTC’s investor capitalization graph surpasses its price, it is often followed by price drops.
Data from CryptoQuant indicates concerning trends in the derivatives market as Bitcoin’s funding rate dropped and the coin’s taker buy sell ratio turned red. This suggests that selling sentiment was dominant in the futures market. However, a large number of investors were still buying BTC, as evidenced by its dropping exchange reserve and low net deposit on exchanges compared to the last seven day average.
According to the analysis, BTC was testing its crucial support. If it slips under that, the chances of BTC following past trends and moving towards $31k are high. The Chaikin Money Flow (CMF) registered a downtick, hinting at a failed test of BTC’s support. However, the Relative Strength Index (RSI) remained bullish as it moved northwards.
