Key Takeaways
Bitcoin’s price was just above the average short-term holder cost basis at $107.8k, which should act as a solid support level. The MVRV percentile showed no strong upward or downward signals.
Bitcoin [BTC] dropping below the $112k level meant that the short-term outlook was bearish. Bears pushed the market further down, forcing BTC below $110k.
Moreover, a spike in the Coin Days Destroyed (CDD) metric revealed that some holders were exiting the market. In fact, whale-driven Realized Profits of nearly $4 billion added to the cautious mood.
Having said that, the rotation of capital from Bitcoin to Ethereum [ETH] contributed to the cooling spot ETF flows into BTC.
An Ethereum-led rally in Q4 appears possible, but can Bitcoin keep pace?
Trading Bitcoin using on-chain metrics
In a post on X (formerly Twitter), crypto analyst Axel Adler Jr noted that the MVRV Percentile was at 39%.
This indicated a risk/reward balance at neutral levels. Notably, the market has cooled down after going to elevated risk zones in recent weeks.
Another analyst pointed out that Bitcoin was below the $112.6k level, which was the Cost Basis for 1-3 month holders.
Weighted by their respective Realized Market Cap share, it was estimated that the average short-term holder (STH) cost basis was at $107.8k. This would be an important support level.
Traders’ playbook in motion
XWIN Research Japan explained that combining MVRV, STH SOPR, and STH Realized Price can help time entries and exits.
Their strategy revolved around the MVRV valuation, with the 365-day mean being within ±1σ bands. If the MVRV sinks below the -1.5σ and can’t reclaim, traders should remain cautious and sidelined.
On top of that, they advised watching the 1–3 month and 3–6 month realized prices. A quick rebound from those bands would mark strength. Still, chasing strength remained risky.
When signals align
The immediate risk sat just below the recent swing low. A BTC close under the STH band for 2–3 days would invalidate long setups.
When the 7-day moving average of the Bitcoin STH SOPR drops below 1, it would be a reset trigger.
So, traders can begin to scope out the next long setup once the STH SOPR climbs back above 1. This would be an indication of strength.
The post also noted that exchange net outflows during the time of entry, when all three triggers align, would help the quality of the long setup. As always, traders must do their own research before trying out this strategy.
