Despite the sudden decline, BTC’s metrics on-chain show signs of a rapid turnaround.
On-chain metrics reveal investors’ sentiment
The on-chain volume is perhaps the most important metric. It can be used to better understand the actions of investors. BTC’s on-chain volume jumped by 13.73 billion to 46.38 trillion on February 19, and again on February 24, at 4.58 billion on February 24.
The price of Bitcoin dropped from $40,122 down to $34,400 during the same time. This divergence is sufficient to show that investors were keen for this dip. It also suggests accumulation.
After BTC crashed from approximately $57,800 down to $41,600, a similar surge in volume was observed on February 7. The volume spike was fractal and indicates that investors were buying the dip.
Both these bumps were significantly higher than the 200-day Moving Average volume. This indicates the footprint of long-term holders.
Although this bullish outlook may seem unlikely at first, the 30-day Market Valu to Realized Value (MVRV), model supports it. This indicator measures the average profit or loss of investors over a given time period. An indicator with a negative value of -10% is often used to indicate an “opportunity zone”, where long-term investors buy panic-selling short-term traders.
The 30-day MVRV saw a jump from -6.8% down to $2.8% in the past three days, further proving that long-term owners are indeed accumulating.
The funding rate chart gives a better picture of the BTC market. This indicator can be used to determine the market’s sentiment. If the value is positive, it means that most traders are bullish about Bitcoin. A negative value is often a sign that traders are trying to sell short.
The funding rate has been on the rise and did not stop climbing until it reached a new record high in early 2022. The crash caused the funding rate to plummet to -0.00071%, which is indicative of traders’ sentiment. It is hovering at 0.001% right now, which reflects the bullish outlook on the king coin.
Although BTC’s price is trending higher in the short term, its upside seems to be limited at $43,000. Any move above this level is unlikely, especially if buyers are not willing to support the uptrend.
