- Although experiencing a price correction due to selling pressure on Bitcoin is not a new development, the widespread decline seems to have calmed down.
- The recorded value at the time of writing was $395.81 billion. Similarly, the market value was over $500 billion.
- When WR is high, it means that whales are actively trading on exchanges. However, when WR is low, it implies low trading activity on exchanges.
According to the current metrics on Bitcoin, the selling pressure on BTC is decreasing; Could it trigger a new bullish rally?
Decrease in Selling Pressure on Bitcoin
Although the cryptocurrency market has not been at its best recently, Bitcoin continues to be an important asset for investors. This is because Bitcoin is mostly responsible for the direction the market takes.
Although it is not a new development for Bitcoin to experience a price correction due to selling pressure, the widespread decline seems to have calmed down. Speculation also followed that the BTC price could soon gain stability.
To consider the possibility of stability or price increase, CryptoQuant author Crypto_Lion evaluated the Fund Flow Ratio (FFR) and the Whale Ratio (WR). FFR helps understand the behavior of whales and the trading volume on exchanges.
This metric is done by measuring the total amount of BTC entering and exiting exchanges. This is done in relation to the amount of BTC transferred on the Bitcoin network. On the other hand, the Whale Ratio is the ratio of the top 10 inflows to total inflows entering exchanges.
When WR is high, it means that whales are actively trading on exchanges. However, when WR is low, it implies low trading activity on exchanges. Regarding both metrics and the above graph, Crypto_Lion said the following:
“Selling pressure has significantly decreased. This is a suggested indicator as its characteristics change greatly from year to year and shows us where we should pay attention (exchanges or over-the-counter). When FFR increases this year, it becomes a point of price increase.”
However, can the decrease in selling pressure immediately lead to an increase in BTC? Well, a metric that can have a say in this is the realized market value of Bitcoin. Realized value is a way to measure the value of a cryptocurrency and tries to measure it by looking at the stored value on the Bitcoin network. It also takes into account the Volume-Weighted Average Price (VWAP). The recorded value at the time of writing was $395.81 billion. Similarly, the market value was over $500 billion.
To avoid being deceived by market value, the fact that the realized value is lower than the market value means that BTC’s value is not low in current market conditions. Therefore, there is a possibility that there will not be a significant price increase in the short term.
BTC’s price may remain within a reachable range
Another way to evaluate the possibility of a rally or not is to assess it from a technical perspective. According to the BTC/USD four-hour chart, neither buying nor selling pressure has dominated the market for the past few days.
This quiet period has caused the Relative Strength Index (RSI) to remain at 36.16. Although the RSI value indicates that BTC is close to the oversold zone, it likely means that BTC will continue to fluctuate between $25,000 and $26,000.
