Bitcoin ultimately failed to break through the $100K resistance and corrected to $92.5K. This correction occurred due to leverage overheating, as open interest and estimated leverage ratio reached annual highs. Therefore, a 10-20% correction can be seen as a natural phenomenon.
From an on-chain perspective, cycle metrics such as MVRV, NUPL, and Puell Multiple still indicate that Bitcoin is in a bull market with upward potential. The key here is to identify major accumulation periods during corrections, with the 'Short-Term SOPR' metric being particularly useful.
The 'Short-Term SOPR' metric is calculated only for short-term holders who have held coins for more than 1 hour but less than 155 days. It indicates whether these holders sold at a profit or loss; a value above 1 suggests profit, while below 1 indicates a higher proportion of loss.
On November 21, the short-term SOPR rose to 1.096, indicating that some short-term investors realized profits. Historical patterns show that when short-term investors sell Bitcoin at a loss, it often leads to a rebound. Therefore, when corrections deepen or lengthen, causing short-term investors to sell at a loss, it can be interpreted as a good buying opportunity. Use the CQ alarm function to set an alert for when this metric shows negative values and utilize it as a potential buying signal.
Written by MAC_D
