Bitcoin Shows Resilience After Recent Volatility
Bitcoin has managed to climb back above $112,000 in early Monday trading, reaching $112,293 at one point before settling around $111,835. This recovery comes after a particularly volatile week that saw significant price swings and major liquidations across the cryptocurrency market.
I think what’s interesting here is how quickly sentiment can shift in crypto markets. Just last week, we saw investors showing clear signs of exhaustion, with Bitcoin struggling to maintain momentum. The sudden drop resulted in two major liquidation events that wiped out billions in long positions.
Analyst Perspective on Market Health
Despite the recent turbulence, XWIN Research Japan argues that Bitcoin’s bull market remains intact. Their analysis points to on-chain data suggesting “resilience beneath the surface” that many traders might be missing amid the short-term volatility.
The firm highlights two key metrics that support their bullish outlook. Bitcoin’s Market Value to Realized Value (MVRV) ratio has dropped to 2, which historically indicates neither panic nor euphoria among investors. This level typically represents a healthy consolidation phase rather than the end of a rally.
Perhaps more importantly, they note that profit-taking by long-term holders has decreased. This effectively reduces the available supply of Bitcoin in the market, which could create conditions for renewed demand to push prices higher once the current volatility subsides.
Recent Market Impact
The recovery comes after a challenging period for crypto bulls. Over the past seven days, more than $4 billion in long positions were liquidated across the cryptocurrency market. The first major event occurred on September 22, wiping out nearly $3 billion as Bitcoin fell 3% below $112,000.
Thursday brought another wave of liquidations totaling $1 billion, with Bitcoin dropping to around $109,000. Bitcoin long positions accounted for $726 million of the September 22 liquidations, while Ethereum led the Thursday losses with $413 million in long bets erased.
Market Sentiment Recovery
Market sentiment appears to be recovering alongside the price action. The Crypto Fear & Greed Index has risen to a “Neutral” reading of 50 out of 100, marking the first time it’s reached this level since September 19. This represents a significant improvement from the “Fear” territory it occupied recently.
The index has been trending upward since hitting a low of 28 on Friday, which was its lowest reading since mid-April when Bitcoin fell to $80,000. This gradual improvement in sentiment suggests that while investors remain cautious, the panic that characterized last week’s trading has subsided.
XWIN Research maintains that this cycle hasn’t reached its terminal stage, and the current consolidation could actually lay the groundwork for the next major upward move. Their analysis suggests that past cycles have seen Bitcoin enter its strongest expansion phase after consolidating within this MVRV range.
Of course, nothing is guaranteed in cryptocurrency markets, and the recent volatility serves as a reminder of how quickly conditions can change. But the combination of improving sentiment, reduced long-term holder selling, and healthy on-chain metrics provides some basis for cautious optimism about Bitcoin’s near-term prospects.
