Bitcoin appears to be in a consolidation phase, according to recent analysis of price movements and on-chain data.
Bitcoin Chart with Wyckoff Re-Accumulation Pattern
According to CryptoQuant, the current Bitcoin price chart closely matches the Wyckoff consolidation phase. The price has been oscillating in a consolidation range, bouncing between horizontal support around $57,178 and resistance near $71,587. This sideways movement is typical of a consolidation phase, when the market is not clearly bullish or bearish.
MVRV Ratio
The MVRV (Market Value to Realized Value) ratio is currently at 1.97, indicating that the market is still above its fair value. This suggests that Bitcoin is relatively overvalued. Current investors have significant unrealized profits, a common feature during initial distribution or bearish phases. However, this is also acceptable during a re-accumulation phase. For an initial accumulation phase, we would expect much lower MVRV values.
Money flows in and out of the exchange
The current trend shows that the volume of money entering and leaving exchanges is decreasing, consistent with the accumulation phase. The amount of Bitcoin reserves on exchanges is decreasing, indicating that BTC is being transferred out of exchanges, which means accumulation. This behavior is consistent with the accumulation phase, when investors gradually buy and hold Bitcoin.
aSOPR
The aSOPR (Output Profit Ratio) is currently around 1.0. This balance means that the market is balancing between realized profits and losses incurred, a typical scenario of a consolidation phase where neither buyers nor sellers have a clear upper hand.
SOPR ratio (LTH-SOPR/STH-SOPR)
The SOPR ratio for long-term investors (LTH-SOPR) to short-term investors (STH-SOPR) is relatively low. This indicates less profit-taking by long-term investors compared to short-term investors, a positive sign that the market may be at a bottom, consistent with an accumulation or re-accumulation phase.
Reserve on the exchange
Bitcoin reserves on exchanges have been trending down for some time, indicating that BTC is being moved out of exchanges. This movement shows investor confidence and is consistent with a re-accumulation phase, when investors prefer to keep their assets off exchanges in anticipation of future price increases.
Taker Buy and Sell Volume
Both buy and sell volumes for Taker are down, with buy volumes slightly higher than sell volumes. This indicates a period of low volatility and potential accumulation. The slight excess of buy volume over sell volume indicates positive investor sentiment.
Conclude
If the accumulation phase continues, we can expect a breakout to the upside, leading to the next markup phase in the Wyckoff cycle. Current data, including price charts, MVRV ratio, exchange inflows and outflows, SOPR value, exchange reserves, and Taker trading volume, all point to a period of accumulation, which lays the foundation for a potential Bitcoin rally.
