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HomeCrypto NewsAnalysisBitcoin Slips Below $106K: Rising MVRV and Derivatives Data Hint at Deeper Correction

Bitcoin Slips Below $106K: Rising MVRV and Derivatives Data Hint at Deeper Correction

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Bitcoin has dropped below $106,000 after reaching a new all-time high of $112,000. A rising MVRV ratio and bearish derivatives data point to a potential retest of the $100,000 level.

Following a spectacular rally to $112,000 last week, Bitcoin has fallen below the $106,000 support zone. This sudden pullback increases the likelihood of a retest of the $100,000 psychological level, as the MVRV ratio approaches a critical resistance zone.

Bitcoin Price Analysis 

On the daily chart, Bitcoin shows a failure to sustain its uptrend above the $112,000 mark. It is currently down over 3% this week, trading at $105,679.

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Bitcoin Price Chart
Bitcoin Price Chart

This move breaks below the 100% Fibonacci level at $106,184, confirmed by three consecutive bearish candles. Despite the short-term decline, the Supertrend indicator at $101,594 still suggests an ongoing uptrend.

However, the daily RSI has dropped sharply from the overbought region to nearly the midpoint, indicating a significant loss of bullish momentum. Consequently, technical indicators present mixed signals as volatility increases.

A breakdown below $106,184 opens the door to a steeper correction, with the next major support at the 78.6% Fibonacci level of $91,780. Nonetheless, multiple support zones may slow the bearish momentum.

The immediate support lies at the $100,000 psychological level, followed by a horizontal support level at $98,349.

Rising MVRV Ratio Warns Top Formation

According to IntoTheBlock, Bitcoin’s market value-to-realized value (MVRV) ratio has risen to 2.32. Historically, MVRV levels above 2.4 have preceded sharp corrections, as seen during the rallies in October 2021, March 2024, and November 2024.

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With the ratio once again approaching this critical threshold, the probability of a corrective pullback has increased significantly.

Bitcoin MVRV
Bitcoin MVRV

Bearish Sentiment Surge in Derivatives Market

As the short-term pullback intensifies, the derivatives market shows a sharp increase in bearish sentiment. Long-to-short liquidations over the past 24 hours totaled $197.98 million, compared to just $12.78 million in short liquidations. This indicates a significant wipeout of bullish positions and a 3% drop in open interest to $24.83 billion.

Additionally, the long-to-short ratio has declined to 0.93 over the past 24 hours, reflecting growing bearish sentiment. The OI-weighted funding rate has also fallen sharply to 0.0034%, down from a recent high of 0.0068%, further confirming increased bearish pressure.

Altogether, derivatives data suggest a surge in negative sentiment, heightening the risk of a leverage-driven correction.

Bitcoin Derivatives
Bitcoin Derivatives

DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.

Author

Albert Brown
Albert Brownhttps://thecryptobasic.com/
Albert Brown is a cryptocurrency investor and journalist who has been in the nascent space since 2017. His love and passion for technological innovations made him delve deeper into the world of blockchain and cryptocurrencies. As a journalist, Brown has written on several crypto-related topics that have been referenced by popular industry players like Tyler Winklevoss, Binance CZ, etc.

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