Emily Walker
As Bitcoin experiences ongoing price swings, certain crucial indicators will be vital in guiding crypto enthusiasts and investors in navigating potential market changes in the near future.
On-chain Analysis Suggests Bitcoin’s Strength May Wane
Kyle Doops, a technical analyst and host of the Crypto Banter show, has shared his analysis regarding Bitcoin’s possible future movements, focusing on the Short-Term Holder Spent Output Profit Ratio (SOPR). This measure specifically assesses the behavior of short-term investors, taking into account only outputs that were spent within the last 155 days. Essentially, it acts as an on-chain gauge to determine if Bitcoin is being sold at a profit or a loss.
The analyst noted that even though Bitcoin is inching closer to the $100,000 mark, the 30-day average of this important metric remains at 1.02. This suggests that short-term investors might be taking profits, indicating a potential pullback ahead.
This trend historically represents a buying opportunity for new investors if a market correction occurs. “Opportunity could be just around the corner,” he added.
Additionally, the likelihood of a price correction is reinforced by the selling activities of long-term Bitcoin holders, who have sold substantial amounts of their holdings recently. According to data from Doops’ analysis, these long-term holders have liquidated over 128,000 BTC since October, indicating changing market conditions.
This suggests these investors are cashing in their gains following recent surges towards the $100,000 mark. This can signify a pivotal moment in the market cycle, potentially leading to increased volatility as selling pressure remains high.
Despite major sell-offs by long-term holders, demand from US Spot Bitcoin Exchange-Traded Funds (ETFs) has absorbed around 90% of the selling pressure. This strong institutional interest is propelling BTC’s rising value towards the $100,000 threshold, a level that could significantly impact the broader crypto landscape.
Bitcoin’s Bearish Trend Strengthening
After hitting a peak of $99,500 over the weekend, Bitcoin’s upward trend has decelerated, with its price retracting closer to the $92,000 level. This decline has sparked concerns over a potential extended correction.
The primary factor behind this price drop appears to be profit-taking, with various indicators suggesting that retail investors may be gradually offloading their assets.
In the past day, Bitcoin’s value has plummeted more than 6%, now sitting at $92,320, which raises the possibility of continued losses. Nevertheless, investor sentiment remains relatively positive, as reflected in a more than 54% increase in trading volume within the last 24 hours.