When evaluating Bitcoin’s [BTC] investment trends for 2022, investors may need to think twice before diving deeper into the BTC pool. BTC holders should brace themselves for a further decline in value in 2023, according to CryptoQuant analyst Wenry.
At press time, BTC was trading at a two-year low as it began the 2023 trading year at its December 2020 price range. BTC was trading at $16,547.08 as of this writing, according to CoinMarketCap data.
Wenry’s conclusion was based on an examination of several on-chain metrics. BTC’s Realized Price, MVRV Ratio, and a comparison of its spot trading volume to derivative trading volume were among them.
Wenry discovered that Bitcoin closed 2022 at a Realized Price of $19,809. As a result, he noted that BTC was a long way from the Realized Price of $21,107 in early November, just before FTX‘s demise.
The Realized Price is a metric that represents the average price at which BTC was purchased over a given time period. The metric provides insight into overall market sentiment and BTC demand.
For example, if it rises over time, it indicates that more people are purchasing BTC at higher prices, indicating a bullish trend.
If, on the other hand, BTC’s Realized Price falls, it may indicate that fewer people are willing to buy BTC at higher prices, which may be interpreted as a bearish sign.
Wenry concluded that the end-of-year price of $19,809 was “clear evidence that the bear market continued.”
Wenry examined BTC’s MVRV ratio and discovered that, since Terra-collapse, Luna’s BTC has “not been able to significantly exit the undervalued section.” This meant, according to Wenry,
“investment sentiment is still very low, and the attractiveness of low-priced purchases is also declining as time goes by, which is a double whammy.”
Wenry also addressed the state of BTC’s spot and derivative exchange volumes. He stated that the risks of massive leverage trading in the bull market between 2020 and 2021 were articulated by bearish conditions in 2022. This reduced BTC’s spot and derivative trading volume on exchanges.
“In short, during the bull market in 2021, when the spot trading volume was 1, the derivative trading volume rose to the 7-10, whereas the current trading volume has shrunk to the 2-3, Wenry concluded”
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