Bitcoin Shows Resilience After Recent Pullback
Bitcoin has managed to recover above $112,000 in early Monday trading, reaching a 24-hour high of $112,293 according to CoinGecko data. This comes after a week of significant market volatility that saw the cryptocurrency experience two major liquidation events. The current trading price sits at $111,835, showing some stability after last week’s sharp declines.
Analysts had been pointing to signs of investor exhaustion in recent sessions, but the recovery suggests there might be more strength in this market than initially appeared. The bounce back above $112,000 marks the first time Bitcoin has reached this level since Thursday’s sudden drop, which had many traders concerned about a potential trend reversal.
On-Chain Data Supports Bullish Outlook
Crypto investment firm XWIN Research Japan published analysis suggesting that despite recent volatility, Bitcoin’s bull market remains intact. Their research, shared in a CryptoQuant note, points to long-term holder behavior and the Market Value to Realized Value (MVRV) ratio as key indicators supporting this view.
The MVRV ratio, which compares Bitcoin’s market value to the average cost basis of holders, has dropped to 2. This means the average cost basis is around half of Bitcoin’s current price. Historically, this level reflects neither panic nor euphoria among investors. XWIN noted that past cycles have seen Bitcoin enter its strongest expansion phase after consolidating in this MVRV range.
What’s interesting is that profit-taking by long-term investors has actually decreased recently. This effectively reduces the available supply in the market, which can help offset short-term volatility and create conditions for renewed demand to push prices higher. The firm believes these metrics show the current cycle hasn’t reached its terminal stage yet.
Market Liquidation Events
The recovery comes after crypto bulls suffered significant losses totaling over $4 billion across two major liquidation events in the past week. On Monday, September 22, nearly $3 billion in long positions were wiped out as Bitcoin fell 3% below $112,000, dragging the broader market down with it according to CoinGlass data.
Then on Thursday, another $1 billion in crypto long positions were liquidated when Bitcoin dropped to $109,000. Bitcoin itself accounted for $726 million of the September 22 liquidations, while Ethereum long positions led the Thursday wipeout with $413 million erased.
Sentiment Recovery
Market sentiment appears to be recovering as well. The Crypto Fear & Greed Index has risen to a “Neutral” reading of 50 out of 100 on Monday, marking a 13-point increase from Sunday. This is the first time the index has reached neutral territory since September 19, recovering from a period of “Fear” that saw it drop to 28 on Friday – its lowest level since mid-April when Bitcoin was trading around $80,000.
While the recent volatility has certainly unsettled traders, the underlying data suggests this might be more of a digestion period rather than the end of the rally. The combination of reduced profit-taking, healthy MVRV levels, and recovering sentiment paints a picture of a market that’s consolidating rather than collapsing. Whether this consolidation will indeed serve as groundwork for the next major upward move remains to be seen, but the current indicators appear more constructive than many might expect given the recent price action.
