Bitcoin has experienced nearly a 10% correction over the past 2 days. Is this the end of the correction or could further declines occur?
Let's examine the sentiment of short-term investors who hold their Bitcoins for less than 155 days. Why them? Because they have a significant impact on the market and are often influenced by emotions, which can provide insight into the overall market sentiment. I'll use 3 metrics here:
1. Short-term Holder SOPR - In short, values below 1 indicate BTC being moved at a loss, while values above 1 indicate profit-taking.
2. BTC Short-Term Holder Net Profit Loss to Exchanges - Bitcoin sent to exchanges by short-term investors (sold at a loss or profit).
3. Net Taker (buy orders - sell orders) in perpetual swaps - Executed orders.
1. STH SOPR - shows that in the last 2 days, short-term investors have been selling their Bitcoins at a loss. Currently, we are returning above the 1 level, signaling weakening selling pressure.
2. BTC Short-Term Holder Net Profit Loss to Exchanges - similarly, short-term investors' realized BTC transfers to exchanges show that they have stopped realizing losses.
3. Net Taker - there has been a massive -$899M net volume, the largest this year. This occurred during misinformation regarding the U.S. Government selling 30k BTC (which turned out to be fake news as they only sold 2k BTC). Currently, volumes are neutral.
What does this mean? It means that selling pressure is weakening. Weak hands have sold off, and the market is waiting to see what happens next. Does this mean the correction is over? It might be, but remember, unforeseen events like a black swan event or negative news such as the US government or Mt. Gox selling Bitcoins could immediately trigger a BTC price drop. We have no control over such events. If nothing like that happens, there is a chance that the end of the correction is near.
This is not investment advice. Past performance is not indicative of future results.
Written by IT Tech