Bitcoin price has seen a significant price surge since the end of March. It surged above $30,100 on Friday before embarking on what most believe is a price correction. The price of Bitcoin had risen about 50% between mid-March and mid-April.
On-chain data seem to suggest that while the crypto market is still bullish on the surface, signs of potential selling are evident upon a much deeper look.
Rise in social volume toward BTC
The dramatic rise of BTC price above $30,000 resulted in the social volume toward BTC rising by 81% month on month. However, Bitcoin was not the only cryptocurrency to experience a surge in social mentions. Stablecoins and altcoins also witnessed a rise in social mentions over the last month as the general crypto market exhibited signs of a strong bullish recovery.
According to Santiment, a high social mention is usually a bearish signal and points to traders considering the market conditions as having attained the highest level thus shifting to profit-taking.
To support Santiment’s argument, whales are showing no significant interest since transactions worth over $100,000 have been within the normal ranges. Furthermore, discussions surrounding cryptocurrencies in overall have also declined although this is not much of an indicator seeing that FOMO could bring the discussions back at any time.
What next for Bitcoin price?
The 365-day Market Value to Realized Value (MVRV) ratio has been on the rise. The indicator has risen from the neutral line to just under 30% in a span of about 30 days.
Normally, a breach above 30% puts bitcoin in the danger zone, synonymous with price corrections. In the past (November 2021, December 2020, and September 2019), the MVRV ratio rising beyond 30% has resulted in a price drop.
Going by past trends, bitcoin price is vulnerable to a price correction seeing that the MVRV ratio is almost approaching the 30% mark. There is also a bearish crossover taking place on the Moving Average Convergence Divergence (MACD) technical indicator that suggests the same.
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