Bitcoin: Know this about the state of BTC as you hold trading positions in 2023

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BTC opened the new year at a two-year low Some on-chain data suggests further price declines in 2023

When evaluating Bitcoin [BTC] investment trends of 2022, investors might need to think before deepening the BTC pool. According to CryptoQuant analyst Wenry, BTC holders should prepare for another drop in value in 2023.

Starting the 2023 trading year at its December 2020 price range, BTC was trading at a two-year low at press time. According to data from CoinMarketCap, BTC traded hands at $16,547.08 at the time of writing.

ReadBitcoins [BTC] Price Prediction2023-24

Wenrys’ conclusion was based on an evaluation of a few on-chain metrics. These included the realized price of BTC, its MVRV ratio, and a comparison of its spot trading volume versus its derivatives trading volume.

Wenry found that BTC closed 2022 with a realized price of $19,809. He therefore noted that BTC was far from the realized price of $21,107 at the beginning of November, just before the collapse of FTX.

The realized price is a measure that reflects the average price at which BTC was acquired over a given period. The metric offers insight into general market sentiment and demand for BTC.

For example, if it increases over time, it indicates that more people are buying BTC at higher prices, which is a bullish sign.

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On the other hand, if the realized price of BTC is decreasing, it could indicate that fewer people are willing to buy BTC at higher prices, which could be considered a bearish sign.

At $19,809 at the end of the year, Wenry concluded that this was clear evidence that the bear market was continuing.

Source: CryptoQuant

Will BTC recover?

Wenry looked at BTC’s MVRV ratio and found that since the collapse of Terra-Luna, BTC had not been able to significantly break out of the undervalued section. According to Wenry, this meant that,

investment sentiment is still very weak, and the appeal of buying cheap is also diminishing over time, which is a double whammy.

Source: CryptoQuant

Wenry also commented on the status of BTC’s spot trading volume and derivatives trading volume. He said the risks of the huge leverage in the bull market between 2020 and 2021 were set forth by the bearish conditions in 2022. This led to a decrease in the trading volume of BTC spot and derivatives on exchanges.

In short, during the bull market of 2021, when the spot trading volume was 1, the derivatives trading volume increased to 7-10, while the current trading volume decreased to 2-3, concluded Wery.

Source: CryptoQuant

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