Bitcoin (BTC) 30-day MVRV has reached bull market levels of early 2021. This has resulted in many investors making unrealized profits. On-chain metrics reveal that miners are selling and adding headwinds to the ongoing rally. US banks are cutting ties with crypto exchanges, with other developments starting to pile up. Crypto analyst Akash Girimath explains the reasons for the U-turn in the market.
3 vital signs for a U-turn for bitcoin and altcoins
cryptocoin.comAs you follow, Bitcoin price has been one of the critical reasons for this latest bull trend in the crypto market. Investors need to be wary of a sudden sell-off as the rally continues to push some altcoins to new highs. Here are the 3 signs of the U-turn.
Unrealized profits abound
The Market Cap to Realized Value (MVRV) indicator shows that many cryptocurrencies are overexpanded. This on-chain metric is used to determine the average profit/loss of investors who bought an asset in the last month. The amount of unrealized profit is directly proportional to the size of the rally. The 30-day MVRV for Bitcoin has risen to 27%, showing the average profit of all addresses that bought BTC in the past month.
For ETH, that number peaked at 19.6%. But in the last 24 hours, many investors have already booked profits. This caused the Ethereum price to drop from $1,621 to $1,524. In response to this, the 30-day MVRV shows that the average profit of all addresses that bought ETH in the past month fell from 19.6% to 7.53%.
Bitcoin miners remain pragmatic
Bitcoin miners continued to sell to the rally, which was evident in the Miners’ Position Index (MPI). This indicator is calculated by taking the ratio of the number of miners sending the mined cryptocurrencies to the exchanges to the number of miners sending it to other addresses. A high MPI value indicates that a greater percentage of miners are sending their coins to exchanges. This is often considered a bearish signal and reveals that miners are selling their crypto holdings.
MPI rose to 3.96 on Jan. 14 when Bitcoin price hit $20.957 and continues to rise. This shows that miners send their BTC to exchange wallets. This move by the miners adds headwind to the ongoing rally, leading to a consolidation that could result in selling.
The icing on the cake: “Bad” news piling up
Regulators, Terra, FTX, Three Arrows Capital (3AC) etc. It’s putting pressure on everything crypto-related after serious unfortunate events in 2021, including big players like Additionally, the sticky situation of Grayscale and its parent company, Digital Currency Group (DCG), is putting the markets under pressure.
This sudden but unexpected rally is just that. While profitable so far, investors need to be wary of a sudden U-turn triggered by market events. A recent report reveals that Signature Bank has limited its crypto partners and users to a minimum purchase amount of $100,000. Also, recent reports show that regulators seized $50 million from Sam Bankman-Fried’s little-known Farmington State Bank in rural Washington.
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