Bitcoin STH MVRV Signals Overheating Is Over — What Comes Next?

Market analyst Axel Adler Jr has shared some valuable insights on the Bitcoin market in relation to recent short-term holders’ activity. This commentary comes as the premier cryptocurrency is currently stuck in a consolidation phase following a flash crash in early February.

Bitcoin STHs Take Profit From Overheated Market – Analyst

In an X post on February 8, Axel Adler Jr explains that Bitcoin Short-Term Holders (STH) i.e. holders of Bitcoin between 1-3 months have been realizing their profits. This development is based on a fall in the STH MVRV – a trading metric that measures market value to the realized value of all Bitcoin held by short-term holders thus helping to determine their profit/loss status.

Generally, an STH MVRV around 1.30-1.35 suggests an overheated market as short-term holders have high unrealized profits indicating potential for a sell-off and price falls. According to Adler Jr., the STH MVRV has recently dropped from 1.35 to average levels meaning a significant portion of STH have closed their positions, helping to cool the market.

Historically, the end of an overheated phase usually translates into a period of price consolidation provided that market demand remains strong. Axel Adler Jr draws a reference to January 2024, when a similar fall in STH MVRV was even strong enough to eventually initiate a price rally. 

However, the crypto analyst cautions that US President Donald Trump’s decisions are largely influencing the current market landscape. This was clearly illustrated last week when the US move to impose new tariffs on China, Mexico, and Canada attracted retaliatory measures causing investors to move funds out of risky assets amidst fears of a brewing trade war.

Axler Adler Jr states that barring any more negative triggers from Donald Trump’s political actions, Bitcoin may break out of its current FOMO-driven consolidation into an uptrend. However, in the case of eventualities, Bitcoin appears to have formed a strong support zone around $90,000 capable of preventing deeper corrections.

BTC Price Overview 

At the time of writing, Bitcoin trades at $96,998 following a 0.98% gain in the last 24 hours. Meanwhile, its trading volume stands at $22.53 billion having crashed by 59.04% in the past day. For the market bulls, relevant resistance levels lie at $102,000 and $106,000. A failure to break above the initial resistance will force Bitcoin to remain in consolidation for the foreseeable future.

Featured image from iStock, chart from Tradingview