Written by: Ryan Yoon, Analyst at Tiger Research
Translated by: Tim, PANews
Two weeks ago, I wrote that Bitcoin might not break through $100,000 yet. The price briefly touched $99,000 before retreating. Currently, it is consolidating below $90,000.
At this time, most people are asking the same question: 'Can we buy in now?'
Yes, it is possible to buy in batches now. But you must set strict stop-loss limits.
Bitcoin enters consolidation: key choices are approaching
The price remains stable above $87,900, which is the average cost for active buyers.
The active realized price represents the breakeven line for the entire market. After the market crash in 2022, it took a year and a half to regain this level. As prices rebound from the bottom, the market can finally breathe a sigh of relief.
Please closely monitor this point and use it as your benchmark.
At the same time, observe the relationship between the short-term holder cost line and the active realized price line. If the short-term line crosses below the active line, the risk will increase rapidly. Currently, this unfavorable crossover has not occurred.
2. On-chain signals are weak, but potential returns are substantial.
Although on-chain key indicators show a downward trend, profit opportunities remain high as we are at the bottom of the value zone.
MVRV Z-Score is currently at 1.17. It has moved away from the cheap price range but has not risen significantly. As buyer and seller forces intertwine, the growth rate here is slowing down. The current trend is weak and direction unclear.
aSOPR (Adjusted Spent Output Profit Ratio) remains at 1.0. Sellers are trading at cost price, choosing to sell even with slim profits.
NUPL is 0.36, just entering the balance zone. Short-term holder NUPL is -0.155, and new buyers are in a loss position. Once the price reaches the cost line, they will sell. This confirms that market sentiment is weak.
Overall, holders tend to sell when there is a slight profit. But note: when MVRV (Market Value to Realized Value Ratio) approaches 1.10, it is an excellent time to buy for long-term investment. The risk is lower at this point, and historical data indicates an average return of 40% over the next year from this level.
3. Bitcoin 'Death Line': $84,000
A drop below $84,000 would pose great risks and could trigger long-term sell-offs.
The cost distribution chart shows a dense buy wall around $84,000 (in the range of $83,000 - $85,000), which is the cost range for a large buying group recently. If the price falls below this level, short-term holders will face deep losses, potentially triggering panic selling.
If the Bitcoin price significantly falls below $84,000, it will disrupt the existing market structure. On December 1, when the price hit $83,000,
Market panic is escalating sharply. $84,000 is not only a technical threshold on the chart but also the last line of defense for maintaining breakeven for the holding groups.
4. Open Interest: Falling back to the low point
The open interest in the futures market has fallen back to the April low, indicating that the crazy leveraged positions have been cleared.
This significant decline is good news; lower leverage reduces the risk of market crashes or consecutive downturns. The market has squeezed out the bubble and is now positioned to rise on this solid foundation. We can expect a new trend to start from this price range.
5. It is now possible to buy the dip, but strict stop-losses must be set.
On-chain tools indicate that now is the best time to buy the dip. The market bubble has dissipated, and expected returns will exceed risks. Now is a wise time to enter.
But if you care about risk, don't just buy. Set clear stop-loss lines, as the current market trend remains unclear.
When the price falls below the active realized price, most active traders will face losses. This will trigger market panic, potentially leading to a market crash.
Set your stop-loss at $87,900. This way, you can buy when prices fall and control risk when key support levels are breached. If the support fails, be sure to hold cash.
