Is it time to buy the bottom? Bitcoin enters a key consolidation zone, keeping an eye on the $8.4M "life and death line"

By Ryan Yoon, Analyst, Tiger Research

Compiled by: Tim, PANews

Two weeks ago, I mentioned that Bitcoin may not break $10K yet. The price briefly touched $9.9M before retreating. Bitcoin is still trading sideways around $9K.

At this time, most people will be curious: “Can I buy the dip?”

**Yes, you can buy the dip in batches. But you have to set a strict stop loss. **

Bitcoin Enters Consolidation: A Key Choice Looms

The price held steady above $87,900, which is the average cost for active buyers.

The active realized price represents the break-even line across the market. After the market crash in 2022, it took a year and a half to regain this level. As prices bottomed out and rebounded, the market was finally able to breathe a sigh of relief.

Pay close attention to this point and use this as your baseline.

At the same time, observe the relationship between the short-term holder cost line and the active realized price line. If the short-term line crosses below the active line, the risk increases rapidly. Currently, this unfavorable crossover has not yet occurred.

2. The on-chain signs are weak, but the potential rewards are substantial

Although key on-chain metrics indicate a downtrend, profit opportunities remain high as we are at the bottom of the value zone.

The MVRV Z-Score is currently at 1.17. It has moved out of the cheap range, but it has not yet climbed significantly. The growth rate here is slowing down due to the intertwining of buyer and seller forces. The current trend is weak and the direction is unclear.

aSOPR (Adjusted Margin on Expenditure Output) was flat at 1.0. Sellers trade at cost and choose to sell even if the profit is small.

The NUPL is 0.36, which is just entering the equilibrium range. Short-term holders NUPL is at -0.155, and new buyers are in the red. Once the price hits the cost line, they sell off. This confirms the weak market sentiment.

In general, holders tend to sell when they make a slight profit. But beware: when the MVRV (Market Cap to Realized Value Ratio) approaches 1.10, it’s an excellent time to buy for long-term investments. The risk is low at this point, with historical data showing an average of 40% gains over the next year from this point.

3. Bitcoin “life and death line”: $8.4M

A break below $8.4M poses significant risk and could trigger a prolonged sell-off.

The cost distribution chart shows a dense wall of buy orders around $8.4M (8.3M-8.5M range), which is the cost range for a large number of buyers in the near future. If the price breaks here, short-term holders will face deep losses, potentially triggering panic selling.

If the price of Bitcoin falls significantly below $8.4M, it will disrupt the existing market structure. On December 1, when the price hit $8.3M,

Market panic has risen sharply. $8.4M is not only a technical threshold on the chart, but also the last line of defense to maintain the breakeven of the holding group.

4. Open Interest: Fall back to a low

Open interest in the futures market fell back to April lows, a pullback that suggests crazy leveraged positions have been liquidated.

This significant decline is good news, as low leverage reduces the risk of market crashes or consecutive plunges. The market has squeezed out of the bubble and is now in place to rise on this solid foundation. We can expect a new market to start from this price range.

5. You can now buy the dip, but you need to set a strict stop loss

On-chain tools show that now is the best time to buy the dip. The market bubble has dissipated, and the rewards are expected to outweigh the risks. Taking a position now is a wise choice.

But if you care about risk, don’t just buy. Set a clear stop-loss line, because after all, the current market trend is still unclear.

When the price falls below the active realized price, most active traders will face losses. This can trigger market panic, which in turn could trigger a market crash.

Set your stop loss at $87,900. This allows you to buy when prices fall and control risk when key support levels fall. If the support level fails, it’s important to keep the cash.

(The above content is excerpted and reprinted with the authorization of partner PANews ****, original link __)

_ Disclaimer: This article is for market information only, all content and opinions are for reference only, do not constitute investment advice, and do not represent the views and positions of block customers. Investors should make their own decisions and trades, and the author and blockers will not be responsible for any direct or indirect losses caused by investors’ transactions. _

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