In mid-January, Bitcoin’s already weak price performance extended into another sharp decline. By early February, the cryptocurrency appeared to be in freefall, breaking through key psychological support levels. One such level is the average purchase price—or cost basis—for a major group of investors: those in Bitcoin ETFs.
Recent on-chain analysis shows Bitcoin has fallen below this level, putting increasing pressure on these investors.
MVRV Drops Below 1 – What It Signals
Market analyst PelinayPA noted in a QuickTake that Bitcoin is now trading below the average realized price for Bitcoin ETFs, which could have significant market implications. The ETF MVRV (Market Value to Realized Value) ratio has also dropped below 1, indicating most ETF investors are currently holding unrealized losses.
Historically, an MVRV sustained below 1 points to growing stress in the Bitcoin market, as it shows losses are widespread within an investor group. According to PelinayPA, this can heighten selling pressure as investors become more emotionally driven. As a result, any short-term recovery attempts are likely to face strong resistance—as is currently happening—until sentiment shifts. Investors who bought at higher prices may look to exit at break-even or with minimal losses to avoid deeper declines.
Since the average realized price for Bitcoin ETFs is around $80,000, that level could act as a major resistance if Bitcoin attempts to rebound.
PelinayPA suggests that if the MVRV stabilizes between 0.8 and 0.9, it could signal that bearish pressure is nearing exhaustion, potentially setting the stage for a short-term rally toward the realized price. Conversely, if the MVRV continues to fall—as the analyst expects—it could spell more trouble for Bitcoin. Significant pressure on ETFs might trigger sell-offs within this group, increasing downward momentum and pushing prices lower, especially over the long term.
Bitcoin Market Snapshot
At the time of writing, Bitcoin is trading around $68,000, up 1.58% over the past 24 hours, according to CoinMarketCap. Data from SoSoValue shows Bitcoin ETFs recorded a net outflow of approximately $1.08 billion in February, following an even larger net withdrawal of $1.61 billion in January.
Frequently Asked Questions
Frequently Asked Questions About Bitcoin Falling Below ETF Investors Average Purchase Price
BeginnerLevel Questions
Q1 What does it mean when Bitcoin falls below the average purchase price of ETF investors
A It means the current market price of Bitcoin is lower than the average price at which investors who bought Bitcoin through ETFs initially bought in Many of these investors are now sitting on paper losses
Q2 What is a Bitcoin ETF
A A Bitcoin ETF is a regulated investment fund that tracks the price of Bitcoin It lets people invest in Bitcoin through traditional stock brokerage accounts without directly buying or storing the cryptocurrency themselves
Q3 Why is this situation considered a sign of selling pressure
A When the price drops below what many investors paid some may panic and sell to cut their losses This increase in sell orders can push the price down further creating more downward pressure
Q4 Is this a bad sign for Bitcoin
A It can be a shortterm negative signal indicating stress and potential selling from a large group of investors However Bitcoin is volatile and prices can recover Its a metric to watch not a definitive prediction
Q5 As a beginner should I be worried about this
A Not necessarily Volatility is normal in crypto This metric is one of many tools analysts use Its more important to focus on your own investment strategy risk tolerance and longterm goals rather than reacting to single data points
Intermediate Advanced Questions
Q6 What specific key metric is pointing to this selling pressure
A The metric is often the aggregate cost basis or realized price for Bitcoin held in major spot Bitcoin ETFs When the spot price trades below this average it indicates a large cohort of ETF investors are underwater
Q7 How is this average purchase price for ETF investors calculated
A Analysts track the net flows and prices at which shares of the ETFs are created The average is a weighted calculation of the Bitcoin purchase prices supporting the ETFs assets
Q8 Could this lead to a cascading selloff
A It increases the risk If the price