As Bitcoin’s price continues to fluctuate, several important metrics might be essential in determining the digital asset’s next direction so that crypto enthusiasts and investors can position themselves for notable market shifts in the upcoming days.
On-chain Data Reveals Bitcoin’s Momentum Under Threat
Kyle Doops, a technical analyst and host of the Crypto Banter show, has offered insights about Bitcoin’s next potential trajectory, utilizing the Short-Term Holder Spent Output Profit Ratio (SOPR) metric. Specifically, the STH-SOPR is a measure used to evaluate the actions of short-term investors, and it only considers outputs that have been spent within the last 155 days. Simply put, it is a key on-chain indicator that shows whether BTC is being sold for a profit or a loss.
According to the analyst, despite Bitcoin slowly approaching the $100,000 price level, this key metric on the 30-day time frame has maintained an average of 1.02, which suggests possible profit-taking by short-term investors and a pullback might be on the horizon.
In the past, this trend has signaled an opportunity for new investors to purchase BTC at better prices should a correction occur. “Opportunity might be just around the corner,” he added.
Bitcoin’s potential for a price correction is further indicated by current negative behavior among long-term Bitcoin holders, as they have been offloading their holdings on a huge scale. Data from Kyle Doops’ report revealed that long-term BTC holders have sold over 128,000 BTC since October, signaling a possible shift in market dynamics.
This development suggests that these investors are opting to realize profits after recent upswings that pushed Bitcoin closer to the $100,000 price mark. It also marks a critical phase in the market cycle that could result in higher volatility as the selling pressure persists.
Even though there have been massive sell-offs from long-term holders, investors of the US Spot Bitcoin Exchange-Traded Funds (ETFs) absorbed about 90% of the selling pressure. This robust institutional demand is driving BTC’s uptrend, pushing its value to the $100,000 milestone, a key level that could alter the dynamics of the general crypto market.
BTC’s Bearish Performance Building
After reaching as high as $99,500 during the weekend, Bitcoin’s upward momentum has slowed down, resulting in a drop closer to the $92,000 level. This recent drop comes in the midst of anticipated price corrections, sparking speculations about an extended downswing.
Profit-taking was considered the primary cause of the price decrease, with several indicators showing that retail investors may be gradually selling their holdings.
In the past day, BTC has fallen by over 6%, bringing its price to $92,320, demonstrating signs of further losses. Despite the decline, positive investors’ sentiment continues to hold strong as indicated by a more than 54% surge in its trading volume in the last 24 hours.
Featured image from Unsplash, chart from Tradingview.com