Bitcoin Price Metric Shows Similar Pattern to Previous FTX Crash

10:11 pm
September 5, 2023
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Bitcoin (BTC) experienced a potential drop last week as an on-chain metric mirrored the move observed during the FTX crash.

According to James Straten, a research and data analyst at crypto insights firm CryptoSlate, the Short to Long-Term Realized Value (SLRV) Ratio flipped for the first time since November 2022. This metric suggests that BTC’s price could have plummeted even further.

Bitcoin SLRV Ratio and the FTX Warning

The SLRV Ratio indicates that there was a surge in the selling of “older” Bitcoin in mid-August. The metric, devised by analyst David Puell and ARK Invest, uses the HODL Waves metric to track Bitcoin’s on-chain velocity.

HODL Waves divides the circulating Bitcoin supply based on the age of coins used in transactions. SLRV divides the coins that moved within the past 24 hours by those that moved between six and 12 months ago. The metric also includes two moving averages, the 30-day and 150-day trendlines, and crossovers between these lines have coincided with significant BTC price events.

Prior to the FTX crash, the 150-day line crossed the 30-day line, and this phenomenon occurred again in mid-August for the first time since then. Straten noted, “SLRV ribbons inverted on August 13, three days before Bitcoin dropped to $25k. Last time the metric inverted was just before the FTX collapse.”

Speculators Reduce BTC Exposure

Past analysis has focused on the behavior of different Bitcoin investor groups. Short-term holders (STHs) or speculators, who have held BTC for 155 days or less, have attracted attention from analytics firms such as Glassnode and CryptoQuant.

The short-term holder cost basis, which previously acted as market support, now sits above the spot price. Straten reports that speculators have been selling their BTC holdings at a loss since late August.

Data from CryptoQuant reveals the price at which various coins used in transactions last moved.

Summary

Last week, Bitcoin experienced downward pressure as the Short to Long-Term Realized Value (SLRV) Ratio mirrored a pattern seen before the FTX crash. The SLRV Ratio indicates that a spike in selling “older” Bitcoin occurred in mid-August. Additionally, speculators have been reducing their BTC exposure, selling their holdings at a loss. It is important to note that this article does not provide investment advice and readers should conduct their own research before making any decisions.

FAQs

What is the Short to Long-Term Realized Value (SLRV) Ratio?

The SLRV Ratio is a metric that uses the HODL Waves metric to track Bitcoin’s on-chain velocity. It divides the Bitcoin supply based on the age of coins used in transactions and includes two moving averages, the 30-day, and 150-day trendlines. Crossovers between these trendlines have coincided with significant BTC price events.

What is the significance of the SLRV Ratio flipping?

The flip in the SLRV Ratio suggests a potential drop in Bitcoin’s price. It indicates a surge in the selling of “older” Bitcoin and has previously been observed prior to major BTC price events, such as the FTX crash.

Why are speculators reducing their BTC exposure?

Speculators, who have held BTC for a short period, have been selling their holdings at a loss since late August. This behavior suggests that speculators are becoming less confident in the future price potential of Bitcoin.

Should I make investment decisions based on this article?

This article does not provide investment advice or recommendations. It is important to conduct your own research and analysis before making any investment decisions.


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