If Bitcoin’s price continues to fluctuate, several key metrics could be essential in determining the digital asset’s next direction so crypto enthusiasts and investors can position themselves for notable market shifts in the days ahead.
On-chain data reveals Bitcoin’s momentum is under threat
Kyle Doops, a technical analyst and host of the Crypto Banter show, has done just that insights offered on Bitcoin’s next potential trajectory, using the Short-Term Holder Spent Output Profit Ratio (SOPR) metric. Specifically, the STH-SOPR is a metric used to evaluate the actions of short-term investors, and it only takes into account results issued in the last 155 days. Simply put, it is an important indicator in the chain that shows whether BTC is being sold at a profit or a loss.
According to the analyst, despite Bitcoin slowly approaching the $100,000 price level, this key metric has maintained an average of 1.02 over a 30-day period, indicating potential profit-taking by short-term investors and a pullback could be on the horizon.
In the past, this trend has offered new investors the opportunity to buy BTC at better prices if a correction were to occur. “There may be opportunities just around the corner,” he added.
Bitcoin’s potential for a price correction is further indicated by the current negative behavior among long-term Bitcoin holders as they have shed their holdings on a large scale. Facts Kyle Doops’ report found that long-term BTC holders have sold more than 128,000 BTC since October, signaling a possible shift in market dynamics.
This development suggests that these investors are opting to cash in after recent upswings that pushed Bitcoin closer the prize of $100,000. It also marks a critical stage in the market cycle that could result in higher volatility as selling pressure continues.
Even though there have been massive sell-offs by long-term investors, investors from the US Explore Bitcoin Exchange-Traded Funds (ETFs) absorbed about 90% of the selling pressure. This robust institutional demand is fueling BTC’s upward trend and pushing its value toward the $100,000 mark, a key level that could change the dynamics of the overall crypto market.
BTC’s Bearish Performance Building
After reaching a high of $99,500 last weekend, Bitcoin’s upward momentum has slowed, resulting in a decline closer to the $92,000 level. This recent decline comes in the middle expected price correctionsleading to speculation of a prolonged downturn.
Profit-taking was seen as the main cause of the price decline, with several indicators suggesting that retail investors may gradually sell off their investments.
In the past day, BTC has fallen by over 6%, taking the price to $92,320, showing signs of further losses. Despite the decline, positive investor sentiment remains strong, as evidenced by a more than 54% increase in trading volume in the last 24 hours.
Featured image from Unsplash, chart from Tradingview.com