An on-chain analyst has illuminated several key metrics to determine if Bitcoin is entering a bearish phase. In a recent post on X, on-chain analyst Checkmate responded to a query regarding an on-chain metric that signals when it’s advisable to adopt a bearish outlook on cryptocurrency.
Checkmate revealed two primary indicators: the Short-Term Holder Realized Profit/Loss Momentum and the Short-Term Holder MVRV Ratio Momentum. “Short-Term Holders” (STHs) refer to Bitcoin investors who acquired their coins within the last 155 days, signifying that these metrics are pertinent only to recent market entrants.
The “Realized Profit/Loss Momentum” indicator measures the momentum in the ratio of profit and loss that STHs are realizing through their sales. A chart shared by Checkmate illustrates that the value of this metric has been notably negative in recent days. According to the analyst, it signals a bearish phase when the oscillator in the chart’s lower section turns red, indicating negative momentum in the STH Realized Profit/Loss. The chart demonstrates that this oscillator entered negative territory soon after Bitcoin’s price reached a new all-time high and has stayed there, correlating with Bitcoin’s ensuing challenging period.
The second indicator, the STH MVRV Ratio Momentum, functions similarly by monitoring the gap between the Market Value to Realized Value (MVRV) Ratio for this cohort and its 155-day moving average (MA). The MVRV Ratio is a widely used metric that compares the market value held by investors (market cap) against the amount they initially paid for their coins (Realized Cap). This ratio offers insight into the unrealized profit or loss of the holders.
While the Realized Profit/Loss indicator monitors the net profit or loss investors realize through selling, the MVRV Ratio reveals the potential profit or loss they have yet to realize. Data for the momentum indicator for the MVRV Ratio, specifically for STHs, shows that the oscillator recently assumed negative values. As with the first indicator, this also signals a bearish trend when the momentum turns red. The chart highlights that the STH MVRV Ratio has been below its 155-day MA for the same duration as the negative momentum in the Realized Profit/Loss, reinforcing the bearish signal.
Recently, Bitcoin edged towards $62,000 but has since retreated to around $57,800. This decline aligns with the negative trends illuminated by the discussed on-chain metrics. The analyst’s insights emphasize vigilance for those watching Bitcoin’s market movements, suggesting that these indicators could be crucial in spotting impending bearish trends.
