A key Bitcoin (BTC) on-chain metric has moved out of the “buy” zone, signalling a transition away from low-risk accumulation conditions. However, the market still shows signs of bullish strength.
Bitcoin On-Chain Indicator Urges Caution
According to a recent CryptoQuant Quicktake post by contributor Crazzyblockk, Bitcoin’s Realized Cap Variance (RCV) has exited the “buy” territory, cautioning BTC holders about a potential price correction.
For the uninitiated, Bitcoin’s RCV measures the volatility of the asset’s realized capitalization over a set period – typically 60 days – reflecting changes in the value of coins based on their last on-chain movement. A rising RCV suggests increasing market activity and risk, while deeply negative values often align with low-risk accumulation zones.
The following chart shows that buy flags – highlighted in yellow – have recently disappeared, marking the end of a favorable risk-reward window. However, sell flags – marked in red – have not yet been triggered, largely due to sustained 30-day positive momentum.
Past data shows that buy flags typically emerge when standardized RCV is deep in the negative territory, strengthened by improving trend and upward momentum. However, these conditions are no longer present.
Meanwhile, RCV has entered the neutral-to-high-risk zone above 0.3, indicating that the broader Bitcoin market is heating up and entering a less favorable phase for opening new long positions.
That said, the 30-day price momentum remains in positive territory, suggesting there’s still some bullish energy left in the market. Bitcoin’s recovery over the weekend further supports this view.
Additionally, a sell flag has yet to be confirmed. According to Crazzyblockk, three conditions must be met for that to happen – RCV above 1, negative 30-day momentum, and a declining RCV trend. None of these have materialized yet. The analyst concluded:
We’re in a risk-elevated phase, but not yet at extreme euphoria. Smart money accumulation zones are behind us. Traders should avoid aggressive buys, watch for trend reversals, and consider partial profit-taking if RCV climbs further into overheated territory.
Can Bitcoin Hit A New ATH?
At the time of writing, BTC is trading just 3.5% below its latest all-time high (ATH) of $111,814, recorded on May 24. Still, some analysts warn that a sell-off may occur before BTC attempts a new ATH.
Notably, Bitcoin miner-to-exchange transfers have recently hit a historic high, indicating increased selling activity by miners – potentially adding downward pressure to BTC’s price.
Additionally, veteran crypto analyst Titan of Crypto noted that BTC may be forming a Head and Shoulders pattern on the daily chart, suggesting a possible pullback to $96,000. At press time, BTC trades at $107,775, up 1.7% in the past 24 hours.
