- Selling sentiment remained dominant in the derivatives market
- However, the NVT ratio indicated that Bitcoin was undervalued
Bitcoin [BTC] lost its bullish momentum last week when the price plummeted significantly, but the trend could change soon. In fact, investors should not lose hope as a key metric reaches levels that are rarely reached.
Therefore, AMBCrypto checked the state of the king of cryptos to see how quickly it could regain its bullish momentum on the charts.
Bitcoin reaches a critical level
Bitcoin’s price has fallen by over 8% in the last seven days alone, with BTC valued at $59,044 at the time of writing with a market cap of over $1.16 trillion.
In the meantime, Axel Adler Jr., a popular crypto analyst, recently shared a tweet shows an interesting development. His analysis used BTC’s average inflow/outflow ratio. The measure indicated strong buying pressure, the sixth time in the past decade.
Looking back at history, the price of BTC has risen on the charts whenever the metric showed buying pressure. To be precise, such incidents took place in 2017, 2020 and 2023.
Since the measure has once again reached that critical level, there is a chance that the BTC bulls will gain momentum in the coming days and help depress the price of BTC.
Source:
Is a trend reversal lurking?
Since there were chances of a bullish trend reversal, AMBCrypto took a closer look at the current state of BTC to better understand what to expect from it.
Our analysis of Glassnode’s data showed that BTC’s NVT ratio fell. In general, a decline in the benchmark means an asset is undervalued, indicating an increase in price.
Source: Glassnode
According to CryptoQuant factsBTC’s foreign exchange reserves have also fallen, meaning buying pressure has increased. Furthermore, the king coin binary CDD was green. This suggested that the movement of long-term holders over the past seven days was lower than average. They have a motive to hold on to their coins.
However, things in the derivatives market did not look good. For example, BTC’s funding ratio fell. Moreover, the taker buy/sell ratio showed that selling sentiment was dominant in the derivatives market.
Source: CryproQuant
Therefore, we next reviewed BTC’s daily chart to see what technical indicators were suggesting regarding a trend reversal.
The MACD showed a bearish crossover. Bitcoin’s Relative Strength Index (RSI) entered a sideways path. Both indicators suggested that the bearish price trend could continue.
Read Bitcoins [BTC] Price prediction 2024–2025
However, the Chaikin Money Flow (CMF) gave some hope of a trend reversal and moved north towards the neutral zone.
Source: TradingView