Bitcoin is drifting back down from its recent all-time high of $124K, slowly reaching the $113K price point. On-chain data shows two possibilities.
The 1-year MVRV Z-Score has entered the rare negative territory as the indicator measures unrealized gain or loss compared to historical averages. This implies an increasing share of supply is at the break-even point or in a net loss.
At the time of writing, BTC trades at $113,400, while the relative strength index (RSI) sits at 58, reflecting a moderate consolidation phase rather than overbought conditions.
Pressure on Short-Term Bitcoin Holders
The most critical support now lies near the short-term holder (STH) realized price of $106,000. Researchers observe that, when the cryptocurrency falls below this figure, new market entrants will suffer collective losses, which may catalyze further selling.
Investors in the market usually take the STH realized price as a psychological anchor. A pullback below it has in the past been associated with more sudden corrections, as less sophisticated investors are first to respond to downside volatility.
Signs to Watch for Recovery
The MVRV Z-Score returning to above-zero positions and price crossing over into higher territory at just above $118,000 will trigger the market to rise again.
Such developments indicate a resurgence of unrealized gains and a growing confidence in the asset.
Traders are keenly following how Bitcoin reacts in this consolidative range until such time. Although the situation is not quite this panicky yet, a fall below the level of $106K would cause a shift in moods.
As the Bitcoin dominance remains rock solid and BTC momentum indicators are bearish, patience is advised by analysts. This is only a short-term volatility as supply balances change, but there is the prospect of structural demand for Bitcoin longer term.
At this point, Bitcoin is stabilizing above an important support. Whether it maintains this level or drops lower will decide whether this pullback was a healthy resetting or the beginning of a more serious correction.
