Analyst warns Bitcoin may drop to $31,500 if market weakness continues

Bitcoin (CRYPTO:BTC) has had a volatile start to September, dropping by 8.16% over the past seven days, according to CoinMarketCap data.

Despite a slight recovery in the last 24 hours, uncertainty remains in the market.

Analyst Ali Martinez has issued a warning to investors about Bitcoin’s potential downside, highlighting the significance of the Realized Price-to-Liveliness Ratio.

According to Martinez, if Bitcoin falls below its Realized Price-to-Liveliness Ratio of $51,600, it could trigger significant selling pressure that might push BTC down to its Realized Price of $31,500.

The Realized Price-to-Liveliness Ratio helps evaluate whether Bitcoin is overvalued or undervalued by dividing the Realized Price—the average price at which all Bitcoins in circulation were purchased—by Liveliness, a measure of Bitcoin network activity.

Historical data shows that a drop below this ratio often leads to an extended price decline.

Bitcoin’s price has been turbulent this September, sliding from $59,000 to below $54,000 in the first week of the month.

However, it recently showed some resilience, rising by over 2% to nearly $55,000.

While this minor gain could indicate a bullish move, Martinez warns that September has traditionally been a bearish month for Bitcoin, with an average loss of 4.78% over the past 11 years.

Another analyst, Rekt Capital, has also noted that Bitcoin’s sell-side volume is far from its “seller exhaustion levels.”

This suggests that the market could experience further price declines before any potential rebound.

At press time, the Bitcoin (BTC) price was $55,146.28.