A bitcoin (BTC) price recovery may happen sooner than expected because selling pressure from market participants may be slowing down.
The latest weekly report from the crypto exchange Bitfinex revealed that some on-chain indicators suggest that selling pressure from short-term holders may be waning.
Bitcoin Selling Pressure May Be Waning
Since BTC hit its all-time high in March, the asset’s trajectory has remained bearish, plunging to a new local low of $56,500. One indicator that the bears are currently in charge is the spike in the Exchange Whale Ratio, which reveals that whales have been making large deposits in crypto exchanges, possibly to sell and realize profits.
Once the ratio stabilizes, it is a sign that long-term holders and whales have finished distributing their supply for the time being, preventing any further corrections.
Although whales are major players, short-term holders often trigger significant market responses. The Realized Loss metric shows that this cohort of investors currently dominates selling pressure, which is coming mostly from BTC held for one week to one month. Bitcoin’s spot price usually reacts to changes in the one-week-to-one-month cost basis.
One of the metrics that suggests selling pressure from short-term holders may be waning is the Market Value to Realized Value (MVRV) ratio for one-week to one-month holders. This indicator has dipped to the 0.9 to 1 range often seen during bull market corrections. Bitfinex said there are indications of a local bottom formation.
In addition, the short-term holder MVRV ratio is at 0.96, a level that often precedes a market recovery. This suggests that short-term holders could be nearing exhaustion in their selling.
BTC May Head North Soon
Another metric suggesting a potential BTC price recovery is the Bitcoin Fundamental Index (BFI), which evaluates several aspects of the network’s health, including wallet activity and transaction volume. The index is currently at an inflection point, suggesting that BTC may move northwards soon.
“The current position of the index indicates that selling pressure is waning, while network growth has surpassed levels observed at previously identified market bottoms. This potential for positive movement hinges largely on liquidity expectations, which makes future decisions of the FOMC meeting crucial,” Bitfinex said.
