Key takeaways:
Bitcoin has maintained a range between $120,000 and $125,000 following an 8% leverage adjustment in futures.
Growing spot demand alongside decreased open interest indicates a resurgence of buyer confidence.
The MVRV ratio suggests a possible 15% to 25% rise, aiming for $140,000 to $150,000 by Q4’s end.
Bitcoin (BTC) continued to trade within the $120,000 to $125,000 range after an orderly reduction in leverage across futures markets, implying $120,000 may serve as a significant demand zone for short-term traders.
Market analyst Skew noted that Bitcoin’s recent bounce from the $120,000 level highlighted buying activity at that price. Spot market data from Binance revealed an increase in cumulative volume delta (CVD) around $120,000, indicating renewed interest in spot buying.
Concurrently, perpetual futures markets observed bids clustering around this level, with declining open interest indicating that short positions were being closed as prices began to rebound.
Collectively, these elements suggest that the market might be establishing a new short-term “value area” near $123,000 in the coming days, with significant supply overhead beyond this range.
On-chain metrics support this consolidation viewpoint. Analyst Maartunn observed that short-term holders are nearly evenly divided between taking profits and experiencing losses, with 24,100 BTC sent to exchanges at a profit compared to 19,700 BTC at a loss, indicating a “near 50/50 split, trending green.”
Furthermore, data from Binance further highlighted the leverage reset that accompanied the recent downturn. Bitcoin’s open interest on the exchange dropped from a record $15.07 billion to $13.88 billion on Oct. 6, representing a 7.9% decrease over three days.
This reduction in leverage typically indicates cautious repositioning rather than a complete exit and may set the stage for a more sustainable upward movement as fresh capital flows back into the market.
Related: Bitcoiners are in profit, but beware of short-term fragility: Glassnode
MVRV analysis indicates strong Q4 potential
While the short-term trend indicates consolidation, analysts maintain a generally optimistic outlook for Bitcoin as the year ends. Market strategist Timo Oinonen highlighted the MVRV (Market Value to Realized Value) ratio as a critical indicator for potential growth. The MVRV metric contrasts Bitcoin’s current market capitalization with its realized capitalization, essentially assessing whether the asset is overvalued or undervalued against its holders’ cost basis.
According to Oinonen, Bitcoin’s current MVRV suggests a base scenario where prices could increase by 15% to 25% toward $140,000–$150,000 by the end of Q4, bolstered by long-term holder accumulation and robust short-term cost bases.
A more optimistic scenario, where the MVRV exceeds 4.0, akin to the 2021 cycle, could propel BTC towards $170,000 to $200,000 amidst renewed market enthusiasm and a potential post-halving supply squeeze.
Related: Bitcoin has 100 days to go ‘parabolic’ or end its bull market: Analysis
This article does not offer investment advice or recommendations. Every investment and trading decision carries risk, and readers should conduct their own research before making choices.
