- Bitcoin has fallen below the cost basis for short-term holders (under 155 days).
- Heavy outflows from ETFs have contributed to the recent fall, and the downtrend could continue.
The Bitcoin [BTC] Fear and Greed Index showed a reading of 26, which was still fearful. It improved on the previous day’s reading of 20, which denoted extreme fear.
This sentiment resulted from BTC’s 13.8% drop in the past nine days.
Source: CryptoQuant Insights
In a post on CryptoQuant, analyst Axel Adler pointed out that the short-term holders (STHs) saw modest losses due to the recent price drop.
On average, they were at 6.4% below cost basis, which was at approximately $90.5k according to CQ data.
Where is Bitcoin headed next?
Adler observed that STHs experiencing modest losses could see the market enter a period of consolidation and accumulation.
However, this would need steady demand and a shift in macroeconomic sentiment, which remained fearful and uncertain.
Source: Degenz.Finance
The US spot ETF flows showed heavy outflows over the past ten days. This was one of the primary reasons behind the losses Bitcoin faced over the past week.
Data showed that on the 28th of February, there were inflows worth $94.3. This was dwarfed by the $1.14 billion outflow on the 25th of February.
Sentiment remained bearish, and it could take a while before bulls control the market. In the meantime, further losses were possible, and traders and investors must be prepared.
Source: checkonchain
By definition, the MVRV ratio is the market value divided by the realized value. STH means that it focuses on holders who have held BTC for less than 155 days.
A drop below 1 MVRV meant holders were at a loss, as has been highlighted earlier.
In the previous cycle, after the BTC halving, the price did not drop below the STH cost basis until mid-May 2021.
It went below the 1 standard deviation from the MVRV ratio and stayed there till July before recovering in August.
A similar scenario may occur again. Bitcoin could see more losses and trend downward in the coming weeks, and perhaps consolidate in the $65k-$70k region for a couple of months before recovery.
