- BTC’s 30d MVRV has touched early 2021 bullish market regions, leading to unrealized profits for most investors.
- On-chain indexes show miners are selling, increasing challenges to the current rally.
- Developments such as United States banks suspending deals with cryptocurrency exchanges begin to pile up.
Bitcoin has highly contributed to the latest uptrends in the cryptocurrency market. As the rallies push some alts to touch new peaks, investors should be cautious about sudden selloffs within the marketplace. Here’re three signals that suggest an impending U-turn.
Rampant Unrealized Profits
The MVRV (Market Value-Realized Value) indicators suggest that most cryptos exhibit overextension tendencies. This on-chain index determines the average investor loss/profit for individuals that bought the token within the last thirty days.
Bitcoin’s 30d MVRV has soared to 27%, reflecting average returns for all wallets that bought $BTC within the past month. For Ethereum, this figure hit the 19.6% high, though most investors booked profits over the past day.
That welcomed selloffs in ETH’s price, pushing the alt to $1,524 from $1.621. That had the 30d MVV showing that average profits from wallets that bought Ether in the previous month dipped to 7.53% from 19.6%.
BTC Miners Are Still Pragmatic
BTC miners are still selling into rallies, and the MPI (Miners’ Position Index) confirms that. This index shows the ratio between miners that send their minted tokens to exchanges and those transferring them to different wallets/addresses.
A high MPI number shows many miners are transferring tokens to exchanges –a bearish sign showing miners are reducing their cryptocurrency holdings. The MPI increased to 3.96 on 14 January when BTC continued its upside after capturing the $20.957 mark. That shows miners sent their minted Bitcoins to exchange addresses. That adds woes to the current rally, triggering consolidations that might lead to selloffs.
Intensifying Bad News
Multiple 2021 unfortunate events have regulators cracking down on all crypto undertakings. Remember, market scandals from Three Arrow Capita, Terra, and FTX dented investor sentiment, triggering downside actions in the crypto industry.
Furthermore, Grayscale & parent firm Digital Currency Group are dealing with a situation weakening the markets. In such instances, enthusiasts can forget the sudden and unexpected rally and brace for a possible U-turn.
One recent update indicated that Signature Bank would limit its crypto exposure, restricting buy-ins from $100,000 and above. Other reports show regulators seized SBF’s $50M in Washington’s murky Farmington State Bank.
The crypto space flashed weak tendencies the previous day. The cumulative value of crypto assets, according to Coinmarketcap, reduced by 2.74% to stay at $1.03 trillion during this publication. Also, Bitcoin lost 1.55% in the past day, pausing its upward journey. BTC wavered at around $22,737.99 during this writing.