Author: Ryan Yoon, Tiger Research Analyst
Translated by: Tim, PANews
Two weeks ago, I wrote that Bitcoin might not break through $100,000 yet. The price briefly touched $99,000 before retreating. Currently, it is consolidating below $90,000.
At this time, most people are asking the same question: "Is it time to buy the dip?"
Yes, you can buy the dip in batches. But you must set strict stop-losses.
Bitcoin Enters Consolidation: Key Choices Approaching
The price is stabilizing above $87,900, which is the average cost for active buyers.
The active realized price represents the breakeven line for the entire market. After the market crash in 2022, it took a year and a half to regain this level. With the price bottoming out and recovering, the market can finally breathe a sigh of relief.
Please pay close attention to this point and use it 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 will increase rapidly. Currently, this adverse crossover has not occurred.
2. On-chain Signals Weak, But Potential Returns Are High
Although key on-chain indicators show a downward trend, the 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 price range but has not surged significantly. Due to the intertwining forces of buyers and sellers, the growth rate here is slowing down. The current trend is weak and directionless.
The aSOPR (Adjusted Spent Output Profit Ratio) is flat at 1.0. Sellers are trading at cost price, choosing to sell even with slim profits.
The NUPL is at 0.36, just entering the balance zone. The short-term holder NUPL is at -0.155, indicating that new buyers are at a loss. Once the price reaches the cost line, they will sell. This confirms that market sentiment is weak.
Overall, holders tend to sell when they have slight profits. But note: when the MVRV (Market Value to Realized Value Ratio) approaches 1.10, it is an excellent buying opportunity for long-term investments. At this point, the risk is low, and historical data shows an average return of 40% over the next year from this point.
3. Bitcoin's "Death Line": $84,000
Falling below $84,000 poses significant risks and could trigger long-term sell-offs.
The cost distribution chart shows a dense buy wall around $84,000 (in the $83,000-$85,000 range), which is the cost range for a large group of recent buyers. If the price fails to hold here, short-term holders will face deep losses, potentially triggering panic selling.
If Bitcoin's price significantly drops below $84,000, it will disrupt the existing market structure. On December 1, when the price touched $83,000, market panic escalated sharply. $84,000 is not only a technical level on the chart but also the last line of defense for maintaining breakeven for the holding group.
4. Open Interest: Falling to Lows
The open interest in the futures market has fallen back to April lows, indicating that the crazy leveraged positions have been cleared.
This significant decline is good news; low leverage reduces the risk of market crashes or consecutive drops. The market has squeezed out the bubble, and now it has the conditions to rise on this solid foundation. We can expect a new trend to start from this price range.
5. Now Is the Time to Buy the Dip, But Set Strict Stop-Losses
On-chain tools indicate that now is the best time to buy the dip. The market bubble has dissipated, and expected returns will outweigh the risks. Building a position now is a wise choice.
But if you care about risk, don’t just buy. Set clear stop-loss lines, as the current market trend remains unclear.
When the price falls below the active realized price, most active traders will face losses. This will trigger market panic, potentially leading to a market crash.
Set your stop-loss at $87,900. This way, you can buy when the price drops and control risk if the key support level is breached. If the support level fails, be sure to keep cash on hand.
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