Biggie-sized Bidder Will Drive Bitcoin Rally Again?

by James · April 25, 2023

The cryptocurrency market has experienced significant volatility in recent months, with the price of Bitcoin (BTC) falling from its new annual high of $31,000 to its current trading price of $27,300. This pullback has left Bitcoin at a crossroads, with traders waiting to see if the key support level at $27,000 will hold or break.

However, Bitcoin is known for its volatility, and bid liquidity movement can provide valuable insight into market activity. In Q1/2023, a block of bid liquidity was identified in what appeared to be controlled by a single entity, which was named Notorious BIDaccording to research and analysis firm Material Indicators.

Bitcoin Rally 2.0 On The Horizon?

This device succeeded in attracting more bids to drive a Bitcoin rally and the movement of bid liquidity became predictable over time. However, the game ended in a draw in the first week of March.

At the time of this writing, according to Materials, there are indications that a similar entity may be active in the market again, with bid liquidity movements similar to those seen in Q1. While there is no way to know for sure if the Notorious BID is back, it seems that someone is using a large stack to play a similar game.

Infamous BID wall spotted once again on BTC’s firechart. Source: Material indicators on Twitter.

One of the most important differences between what was seen in Q1 and what is being observed now is that the buying walls change size. This can be a distribution strategy, as the large buyer tries to push the price up to a higher distribution area and eventually use these bids as exit liquidity.

According to the Material Indicator fire chart, there is a significant bid wall just below the $26,000 mark. This bid wall may have the potential to prevent a further decline in Bitcoin’s price in the short term, but only if the $27,000 support floor is breached. Despite this, Bitcoin’s current support level has remained stable, indicating that there is a possibility of a rebound to higher levels. Therefore, it cannot be ruled out that Bitcoin’s price may bounce back to higher levels.

BTC’s MVRV reaches 11-month high

According to Gaah, a researcher and analyst from the CryptoQuant Firm, the market-value-to-realized-value (MVRV) ratio is a key indicator of market sentiment and can provide valuable insight into investor behavior. The ratio is calculated by dividing the market value of Bitcoin by realized capitalization, which is the sum of the value of all Bitcoin transactions since they were last moved on-chain.

BTC’s MVRV ratio hit an 11-month high. Source: CryptoQuant.

When the MVRV ratio is in the green quadrant, below a value of 1.44, it is considered to be in the accumulation zone. This indicates that there is reduced selling pressure in the market, as the realized capitalization of Bitcoin exceeds the market value. In other words, investors are less motivated to sell Bitcoin, as they believe that its true value is higher than the current market price.

Gaah notes that the MVRV ratio peaked at 0.82 in December 2022, when Bitcoin was still trading at around $17,000. This is the same level the ratio reached in 2018, just before Bitcoin experienced a significant drop in value. However, Gaah believes that the current market conditions are different and that the MVRV ratio is a reflection of the increasing institutional use of Bitcoin.