Bitcoin News Today: Bitcoin's Speculative Premium Cracks: A Correction's Hidden Engine

Bitcoin’s MVRV breakdown below its 365-day simple moving average (SMA) has raised concerns about a potential extension of its correction phase, with price action suggesting the $110,000 support level could face further pressure. The MVRV Z-Score, a valuation metric that compares Bitcoin’s market cap to its realized value, has dropped below the long-term benchmark, historically signaling weakening market strength and a higher likelihood of continued downward momentum. The ratio has consistently posted lower highs since the March 2024 peak at 2.77, reflecting fading bullish momentum following Bitcoin’s high of $124,400 earlier this year [2].

The breakdown of the MVRV ratio is a significant bearish signal as it indicates that the speculative premium has weakened. In prior cycles, such a decline has often coincided with prolonged corrections. Analysts have noted that the current environment, while exhibiting signs of overvaluation historically, also faces complicating factors such as rising adoption and institutional demand, which could support the broader cycle despite short-term challenges [2]. However, the trendline break below $110,000 has introduced uncertainty about the immediate price trajectory. The RSI stands at 40.27, indicating that Bitcoin is near oversold territory, but momentum remains fragile [2].

Market dynamics further suggest that the correction could intensify. Spot Taker CVD over the past 90 days has shown an increasing dominance of sell-side activity, placing pressure on buyers and making quick bullish reversals less likely. This trend has contributed to a fragile market structure, where rallies face early rejection, and further weakness could be triggered if selling intensifies [2]. Institutional and ETF inflows remain supportive, but they may not be enough to counteract the current imbalance.

On the fundamental side, wallet activity highlights the growing caution among large holders. Bitcoin whales, or wallets with substantial BTC holdings, continue to sell, particularly in the 100–1,000 BTC range. These groups have shown a balance between accumulation and distribution since the $105,000 support level, signaling indecision and raising questions about price stability [3]. Meanwhile, smaller wallets—those with 0–0.1 BTC—have resumed accumulation as the broader market declines, suggesting retail investors are still viewing the current price environment as favorable [3].

The broader risk environment for Bitcoin has also been amplified by overextended long positions. Data from Binance shows that longs account for 64.55% of leveraged positions, with a Long/Short Ratio of 1.82, indicating strong bullish conviction. However, this imbalance also increases the likelihood of cascading liquidations should prices slip further [2]. Analysts have highlighted that such imbalances, while reflecting optimism, often lead to sudden market corrections during periods of volatility.

In conclusion, Bitcoin’s correction appears to hinge on the ability of buyers to defend the $110,000–$108,800 support zone. While MVRV breakdowns, Taker Sell Dominance, and leveraged positioning all point to caution, the presence of strong demand drivers—including ETF inflows—suggests that the broader bullish cycle is not yet over. If buyers manage to stabilize at key levels, the market may consolidate and eventually set up for a new upward move [2].

Source:

[1] Understanding the MVRV Z-Score (https://newhedge.io/bitcoin/mvrv-z-score)

[2] Bitcoin correction alert! MVRV breakdown points to a $100K fall (https://ambcrypto.com/bitcoin-correction-alert-mvrv-breakdown-points-to-a-100k-fall/)

[3] Bitcoin Correction Risks Deepen With $105000 As Critical ... (https://www.newsbtc.com/bitcoin-news/bitcoin-correction-risks-105000-critical-support/)