Bitcoin Trades Below ETF Cost-Basis As MVRV Signals Mounting Pressure

[Ben Graham]

The middle of January marked the continuation of an already struggling price action for Bitcoin, as it took on another sharp downtrend. Early into February, the flagship cryptocurrency seemed to be on a free-fall, even breaching important 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 evaluation reveals that Bitcoin has since traded underneath this price, and has continued to meet investors with growing heat.

MVRV Falls Below 1  — What This Means 

Market analyst PelinayPA has recently taken to QuickTake to reveal that the Bitcoin price is trading below the average realized price of Bitcoin ETFs, and the possible implications of this market setup. 

Notably, the ETF MVRV (Market Value to Realized Value) index has also slipped under the 1 mark, reinforcing the agitated situation of most ETF investors. Historically, a sustained move below an MVRV of 1 signals increasing stress conditions within the BTC market, as it reflects an overwhelming dominance of unrealized losses amid an investor group.

According to PelinayPA, this condition may cause sell-pressure to heighten, seeing as market participants would increasingly act on their emotions when dealing in the market. As such, short-term recovery attempts are likely to be met with significant resistance (as is currently the case) until the situation sees a turnaround. This is because investors who entered at higher price levels would likely exit their positions at break-even, or even under minimal losses, to avoid deep losses.

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Because the realized price of Bitcoin ETFs is approximately $80,000, this price region could act as a strong resistance level in the event that the Bitcoin price attempts a rebound. PelinayPA clarifies that if MVRV stabilizes within the 0.8–0.9 range, it could be a sign that the current bear pressure is nearing an exhaustion point; a scenario that could precede a short-term rebound towards the realized price. 

On the other hand, if the MVRV continues to decline (as the analyst expects), it could be problematic for the Bitcoin price. This is because ETFs would be under significant pressure, which could trigger sell-offs among this investor cohort. This would, in turn, increase downward pressure and further send prices downwards, especially in the long-term.

Bitcoin Market Overview 

As of this writing, Bitcoin trades for $68,000, reflecting a 1.58% growth in 24 hours, according to CoinMarketCap data. Per SoSoValue data, Bitcoin ETFs have recorded a total net outflow of about $1.08 billion in February. This is after an even more staggering net withdrawal figure of $1.61 billion in January. 

https://www.tradingview.com/x/pAYnB3NP/