On Tuesday, February 9, Bitcoin (BTC) price surged all the way to $48,000 hitting its new all-time high. The BTC price surged more than 20% in a single day after Tesla announced a $1.5 billion investment in the world’s largest cryptocurrency.
After Tuesday’s highs, Bitcoin (BTC) price has retraced partially and is currently trading at $46,314 with a market cap of $859 billion. The recent price pullback for BTC comes as long term Bitcoin holders have resolved to partial profit-booking.
As per the data provided by on-chain data provider Santiment, soon after the Tesla news, the Bitcoin exchange inflows surged to a 3-week high resulting in a surging sell-side pressure. Santiment noted that speculators rushed to ‘sell the news’.
Also, as per the SOAB (Spent Output Age Bands) from Glassnode, the long-term Bitcoin holders have resolved to profit-booking. This indicates that the top has been already formed and we might see some correction in the short-term.
In a bull, always keep an eye on SOAB!
Hot flames (dark color) represent long term #Bitcoin holders taking profits, and usually indicate that the top is in (i.e. early 2018).
At this stage, no reason to worry whatsoever
Add to your @glassnode Dashboard: https://t.co/MuPIePUr9a pic.twitter.com/IWLYCDIznv
— Yann & Jan (@Negentropic_) February 9, 2021
The MVRV Ratio Shows Bitcoin Is In The ‘Overvalued’ Territory
The Bitcoin MVRV ratio is another powerful on-chain indicator that tracks the average profit of a group of holders. As per Santiment, Bitcoin’s 30-day MVRV ratio stands at +27.3%. This is the highest since January 14.
The higher the MVRV ratio, the higher is the average profit margin. Thus, there’s a higher chance that big players will resolve to profit-booking thereby exerting downward pressure on the BTC price. As per its current MVRV ratio, Bitcoin is currently in the ‘overvalued’ territory.
On a yearly basis, the 365-day MVRV ratio for Bitcoin is at +106%. This is pretty much close to its previous ATH of 118%. Well, on-chain indicators clearly hint at a short-term correction. Even if one is not willing to book profits at this stage, one must reconsider investing any fresh capital at this point.
We need another Tesla-like big investor to keep the BTC momentum going. The recent news in the town is that Oracle boss Larry Ellison could be the next one to invest in Bitcoin.
