Mid-January marked the continuation of an already difficult price action for Bitcoin, as it experienced another sharp downtrend. In early February, the flagship cryptocurrency appeared to be in freefall, even breaching key psychological price levels as it crashed.
One of these levels is the cost basis of one of Bitcoin’s most influential investor cohorts: the Bitcoin ETF investors. Data from a recent on-chain assessment shows that Bitcoin has since traded below this price and continued to receive investors with growing interest.
MVRV falls below 1 – what this means
Market analyst PelinayPA recently revealed to QuickTake that the Bitcoin price is trading below the average realized price of Bitcoin ETFs, and what the possible implications of this market setup are.
It is striking that the ETF MVRV index (Market Value to Realized Value) has also fallen below the limit of 1, which further reinforces the uneasy situation of most ETF investors. Historically, a sustained move below an MVRV of 1 indicates increasing stress conditions within the BTC market, as it reflects an overwhelming dominance of unrealized losses within an investor group.
According to PelinayPA, this condition could lead to an increase in selling pressure as market participants would increasingly react to their emotions when trading the market. As such, short-term recovery efforts are likely to encounter significant resistance (as is currently the case) until the situation shows a turnaround. This is because investors who entered at a higher price level would likely exit their positions at break-even levels or even with minimal losses to avoid major losses.
Since the realized price of Bitcoin ETFs is around $80,000, this price region could act as a strong resistance level in case the Bitcoin price attempts a recovery. PelinayPA clarifies that if MVRV stabilizes in the 0.8–0.9 range, it could be a sign that current bear pressure is approaching a depletion point; a scenario that could precede a short-term recovery towards the realized price.
On the other hand, if the MVRV continues to decline (as the analyst expects), this could be problematic for the Bitcoin price. This is because ETFs would be under significant pressure, which could lead to a sell-off among this investor cohort. This in turn would increase downward pressure and send prices further down, especially in the long term.
Bitcoin Market Overview
At the time of writing, Bitcoin is trading at $68,000, reflecting a 24-hour growth of 1.58%, according to CoinMarketCap data. Per SoSoValue dataBitcoin ETFs have recorded total net outflows of approximately $1.08 billion in February. This is after an even more staggering net withdrawal figure of $1.61 billion in January.