- BTC opened the new year trading at a two-year low
- A few on-chain data suggest further price downsides in 2023
Upon assessing Bitcoin’s [BTC] investment trends of 2022, investors could have to think before going deeper into the BTC pool. According to CryptoQuant analyst Wenry BTC holders should brace for a further decline in value in 2023.
Starting off the 2023 trading year at its December 2020 price range, BTC traded at a two-year low at press time. According to data from CoinMarketCap, BTC exchanged hands at $16,547.08 as of this writing.
Read Bitcoin’s [BTC] Price Prediction 2023-24
Wenry’s conclusion was based on an assessment of a few on-chain metrics. These included BTC’s Realized Price, its MVRV Ratio, and a comparison of its spot trading volume vis-a-vis its derivative trading volume.
Wenry found that BTC closed 2022 with a Realized Price of $19,809. He, thus, noted that BTC was a far cry from the Realized Price of $21,107 in early November, right before FTX’s collapse.
The Realized Price is a metric that reflects the average price at which BTC has been acquired over a given period of time. The metric offers insight into the overall market sentiment and demand for BTC.
For example, if it is increasing over time, it indicates that more people are buying BTC at higher prices, which is a bullish sign.
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On the other hand, if BTC’s Realized Price is decreasing, it could indicate that fewer people are willing to buy BTC at higher prices, which could be seen as a bearish sign.
At $19,809 at the end of the year, Wenry concluded that this was “clear evidence that the bear market continued.”
Will BTC recover?
Wenry looked at BTC’s MVRV ratio and found that since Terra-Luna collapsed, BTC had not ”been able to get out of the undervalued section significantly.” According to Wenry, this meant that,
“investment sentiment is still very low, and the attractiveness of low-priced purchases is also declining as time goes by, which is a double whammy.”
Wenry also commented on the state of BTC’s spot exchange volume and derivative exchange volume. He said that the risks of the enormous leverage trading conducted in the bull market between 2020 and 2021 were enunciated by the bearish conditions in 2022. This led to shrinkage in BTC’s spot and derivate trading volume on exchanges.
“In short, during the bull market in 2021, when the spot trading volume was 1, the derivative trading volume rose to the 7-10, whereas the current trading volume has shrunk to the 2-3, Wenry concluded”