Market Correction and Santiment's Analysis
The cryptocurrency market is experiencing a significant downward trend, with Bitcoin (BTC) falling below $90,000 for the first time in seven months. This decline has pulled the broader cryptocurrency market into negative territory for the week.
Amidst this market correction, the analysis platform Santiment has suggested that current data indicates a favorable time to consider purchasing certain cryptocurrencies.
Identifying Potential Buys
According to Santiment's analysis, Bitcoin, Cardano (ADA), Chainlink (LINK), Ethereum (ETH), and XRP are among the cryptocurrencies presenting potential buying opportunities. The platform noted that most major cryptocurrencies have become unprofitable for short-term investors.
Santiment highlighted that wallets that acquired Cardano, Chainlink, Ethereum, Bitcoin, and XRP within the last 30 days are currently experiencing portfolio declines exceeding 10%. This indicates a substantial drop in average transaction returns for these recent investors.
The MVRV Ratio as a Buy Signal
Santiment utilized the Market Value to Realized Value (MVRV) ratio in its analysis to identify a "buy signal on a dip." The platform stated that these cryptocurrencies should be considered for purchase when their returns are significantly negative.
According to Santiment data:
Cardano – ADA: -19.7% (Overbought Zone)
Chainlink – LINK: -16.8% (Overbought Zone)
Ethereum- ETH: -15.4% (Overbought Zone)
Bitcoin- BTC: -11.5% (Good Buy Zone)
XRP: -10.2% (Good Buy Zone) is giving a buy signal.
Santiment recently emphasized that the MVRV ratio is a valuable metric for pinpointing buy zones. While support and resistance levels offer similar insights, the MVRV provides a more precise reference point, according to the analysis platform.
"...In a zero-sum game, buy assets when the average trading returns of your peers are extremely negative. The lower the MVRV ratios, the greater the likelihood of a rapid recovery."