Bitcoin's MVRV Death Cross Signals Potential Downside Risks

Bitcoin's MVRV Death Cross Signals Potential Downside Risks

A rare and potentially bearish signal has emerged for Bitcoin (BTC) as the MVRV Death Cross takes shape, signaling growing downside risks. The MVRV (Market Value to Realized Value) ratio, a key on-chain indicator, compares Bitcoin’s market capitalization to its realized value, helping identify overvaluation or undervaluation. Historically, a high MVRV ratio suggests an overheated market, while a low ratio indicates undervaluation.

The MVRV 30DMA has formed a bearish death cross with the 365DMA, indicating weakening short-term momentum and increasing downward pressure. This cross has preceded price decreases in past cycles, underscoring its role as a market sentiment indicator. With the MVRV converging toward its long-term historical average, the market may have exited the overheated zone, yet no definitive bottom signal has emerged.

Bitcoin recently fell 2.31% to $81,449 during early Asian-market hours, marking its fourth consecutive decline since March 27. The intraday low reached $81,265, reflecting the ongoing corrective pattern similar to previous cycles. Investors should remain cautious of additional downside risks.

Glassnode’s Bitcoin Cost Basis Distribution provides further insights into investor behavior. The most efficient traders bought nearly 15,000 BTC at the $78,000 low on March 10 and sold at the $87,000 local top. With limited BTC left at the $78,000 level, support there is now thin. A support cluster of $80,920 exists below Bitcoin’s spot price, where nearly 20,000 BTC were added. If the correction deepens, six-month cost basis data points to potential structural support at $74,000 and $71,000, where 49,000 and 41,000 BTC were added, respectively.

These levels reflect conviction-driven accumulation zones that could absorb additional downside pressure. Meanwhile, a key resistance may be forming around $95,000, where investor cost basis clusters have grown by 12,000 BTC since March 24.