- Bitcoin investors seem to be holding tokens significantly below their acquisition cost, pointing to a bearish trend.
- Scott Minerd of Guggenheim Investments holds a pessimistic outlook, expecting BTC to drop further.
- Capitulations are tough to identify and have led to historic realized losses in Bitcoin.
Bitcoin is trading at a price further away from the average price at which coins moved on the network. The recent price action hints at a bearish trend typically aligned with capitulation events. Institutional investors are wary, suggesting BTC may drop further.
Bitcoin heads toward capitulation
Bitcoin short-term holder market value to realized value (STH-MVRV) is an indicator that removes the long-term trends from the asset's fair value. Fair value or MVRV is calculated as an asset's market capitalization divided by realized capitalization. This indicator represents a more accurate take on a short-term overvaluation and undervaluation of Bitcoin than fair value.
Notoriously accurate in confirming bull and bear markets ahead of other indicators, STH-MVRV oscillates closely around 1. Historically, the 1-line of the indicator has worked as a resistance/support line. Very low values indicate short-term holders are holding coins significantly below their acquisition cost.
During a bearish trend, this is aligned with capitulation. The value has dropped significantly; it is currently in the STH Holding Losses zone, confirming that Bitcoin is likely heading toward capitulation day.
Bitcoin: Short Term Holder MVRV
In his strategy session streamed on July 19, Tony Vays, independent Bitcoin analyst, said,
I've pretty much been somewhat bearish most of this triangle, and I remain so right now. That's because I still think that a capitulation day is coming. This capitulation day is coming soon because I also believe that the price of Bitcoin will bounce this summer and be on the way back up, breaking the all-time high later this year.
Likewise, Scott Minerd, chairman and chief investment officer of Guggenheim Investments, believes that under the technical consensus that "every time a support level is tested, it becomes weaker," the $30,000 support level may soon fail to hold Bitcoin price.
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