Bitcoin has dropped below $106,000 after reaching a new all-time high of $112,000. A rising MVRV ratio and bearish derivatives data point to a potential retest of the $100,000 level.
Following a spectacular rally to $112,000 last week, Bitcoin has fallen below the $106,000 support zone. This sudden pullback increases the likelihood of a retest of the $100,000 psychological level, as the MVRV ratio approaches a critical resistance zone.
Bitcoin Price Analysis
On the daily chart, Bitcoin shows a failure to sustain its uptrend above the $112,000 mark. It is currently down over 3% this week, trading at $105,679.
This move breaks below the 100% Fibonacci level at $106,184, confirmed by three consecutive bearish candles. Despite the short-term decline, the Supertrend indicator at $101,594 still suggests an ongoing uptrend.
However, the daily RSI has dropped sharply from the overbought region to nearly the midpoint, indicating a significant loss of bullish momentum. Consequently, technical indicators present mixed signals as volatility increases.
A breakdown below $106,184 opens the door to a steeper correction, with the next major support at the 78.6% Fibonacci level of $91,780. Nonetheless, multiple support zones may slow the bearish momentum.
The immediate support lies at the $100,000 psychological level, followed by a horizontal support level at $98,349.
Rising MVRV Ratio Warns Top Formation
According to IntoTheBlock, Bitcoin’s market value-to-realized value (MVRV) ratio has risen to 2.32. Historically, MVRV levels above 2.4 have preceded sharp corrections, as seen during the rallies in October 2021, March 2024, and November 2024.
With the ratio once again approaching this critical threshold, the probability of a corrective pullback has increased significantly.
Bearish Sentiment Surge in Derivatives Market
As the short-term pullback intensifies, the derivatives market shows a sharp increase in bearish sentiment. Long-to-short liquidations over the past 24 hours totaled $197.98 million, compared to just $12.78 million in short liquidations. This indicates a significant wipeout of bullish positions and a 3% drop in open interest to $24.83 billion.
Additionally, the long-to-short ratio has declined to 0.93 over the past 24 hours, reflecting growing bearish sentiment. The OI-weighted funding rate has also fallen sharply to 0.0034%, down from a recent high of 0.0068%, further confirming increased bearish pressure.
Altogether, derivatives data suggest a surge in negative sentiment, heightening the risk of a leverage-driven correction.
