Is Bitcoin Bounced Like a Dead Cat? BTC Reclaims $57,000, But Analysts Aren't Convinced

bitcoin prices plummeted on July 4 before slumping further a day later. However, by Friday's close, the bar ended with a long lower wick, and demand extended into the weekend. As btc prices stabilize, there may be signs that the downtrend is over, but not according to this analyst.

bitcoin remains under massive selling pressure – here's why

Citing on-chain data, the analyst x.com/OnChainCollege/status/1809963515102269827″ target=”_blank” rel=”noopener nofollow”>saying The downtrend remains and sellers have the upper hand. Pointing to bitcoin’s MVRV momentum indicator, the trader noted that the reading is in negative territory for the first time in over 16 months.

The last time this happened was in March 2023. While prices recovered a few months after stagnating in early Q3 2023 before taking off in Q4 2024, it remains to be seen whether the current formation will follow this script.

The bitcoin MVRV momentum indicator is a technical tool. It gets its data from on-chain readings, comparing the market cap to the realized value of btc. These two readings are often used to gauge overall market sentiment.

When the indicator tends to break above the one-year moving average, bitcoin prices tend to rise. The chart shows that when prices were soaring, breaking above $70,000 and reaching $73,800, the indicator was holding firmly above the moving average.

The indicator is below the moving average at the time of publication, suggesting broad-based weakness. If this trend continues, It may mean that The market is turning bearish after overheating in the first half of the year.

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Still, if we read the chart and, above all, if we take into account the recovery in March 2023, when the same scenario was published, investors are faced with a dilemma. The indicator suggests market weakness, allowing buyers to double down on their bets.

At the same time, the break of the 12-month moving average could mean that bears are starting to operate and further losses could be on the horizon.

Should btc traders be patient?

The current situation forces traders to be patient and monitor the market closely. So far, when btc prices plummeted last week, they have become more attractive to sell, which has fueled the downward momentum.

This, in turn, presented an opportunity for buyers to buy back at a discount, forcing a short squeeze and liquidating leveraged sellers in the process.

It remains to be seen whether leveraged traders will capitulate and exit after the gains of the past 48 hours. Still, one on-chain analyst x.com/AxelAdlerJr/status/1810153058061430895″ target=”_blank” rel=”noopener nofollow”>grades that unrealized losses of short-term holders (STH) remain high. If prices fall and STHs panic and sell, a rapid price collapse could be triggered.

Featured image from Canva, chart from TradingView