Bitcoin Struggles at $96K: Is a Price Correction Coming Soon?

Bitcoin (BTC) recently reached an all-time high of $99,400, before entering a period of fluctuation. 

Over the past week, BTC has traded between $92,000 and $98,000, indicating a consolidation phase after its sharp rise. At press time, Bitcoin was priced at $96,158, marking a slight increase of 0.47% in the past 24 hours and a 1.30% rise over the last seven days. This steady movement suggests that Bitcoin is consolidating its gains before any significant price shifts.

Bitcoin’s daily trading volume stands at $82.55 billion, with a market capitalization of approximately $1.9 trillion. Despite the price fluctuations, the asset’s value remains strong, supported by a circulating supply of 20 million BTC. 

The recent price movements show that Bitcoin is currently in a tight range, oscillating between $94,993 and $97,010 in the last 24 hours.

Decreased Realized Profits Indicate Market Cooling

According to data from Glassnode, the amount of daily realized profits from Bitcoin transactions has seen a noticeable decline. After peaking at $481 million per day on November 16, the daily realized profits have dropped by 42%, now sitting at $277 million. 

Source: Glassnode

This reduction signals that the market may be entering a period of consolidation rather than experiencing continuous upward momentum. Traders appear to be less inclined to take profits at current levels, suggesting that Bitcoin may face a temporary slowdown or a correction.

A sharp drop in realized profits typically signals that fewer market participants are cashing out, indicating a cooling of bullish sentiment. In this context, Bitcoin’s price may remain range-bound until a new catalyst triggers further price movement, whether to the upside or downside.

Bitcoin’s MVRV Metric Approaching Warning Levels

The Market Value to Realized Value (MVRV) metric for Bitcoin has entered a critical zone. Currently at +4.2%, the MVRV is approaching the +5% threshold, which historically has indicated a potential price correction. 

MVRV compares the current price of Bitcoin to the average price at which it was last moved, providing insights into whether Bitcoin is overvalued or undervalued relative to its recent price history.

Source: Santiment

When the MVRV approaches or exceeds +5%, it suggests that the market may be overheated, and a correction could be on the horizon. Conversely, when the MVRV drops to -5%, it often signals that Bitcoin is undervalued and may be poised for a bounce. Traders and analysts closely monitor this metric to assess market sentiment and anticipate potential price corrections.

Outflows from Exchanges Signal Strong Institutional Interest

Despite the cooling of daily realized profits, Bitcoin’s spot exchange data shows that large investors remain confident in the asset. According to Coinglass, Bitcoin exchanges have experienced $860 million in outflows over the past four days. This outflow suggests that institutional investors and whales are withdrawing their Bitcoin holdings from exchanges, possibly to store them in private wallets for long-term holding.

Source: Coinglass

Exchange outflows typically indicate reduced selling pressure, as investors move their assets off exchanges to avoid potential sell-offs. The fact that such large amounts of Bitcoin are leaving exchanges is generally seen as a bullish signal, as it suggests that long-term investors are not looking to sell their positions. 

This trend may also encourage new investors to enter the market, seeing Bitcoin as a store of value in times of uncertainty.