Deep Tide TechFlow news, on January 10, cryptocurrency analyst Avocado_onchain stated that the recent price drop of Bitcoin has made market sentiment more negative. This downturn was driven by uncertainty over the Federal Reserve's interest rate cuts, cautious sentiment among investors before President Trump's inauguration, and news that Bitcoin was allowed to be sold in the Silk Road case in the U.S., which intensified bearish sentiment. To assess the likelihood of further corrections, I analyzed several on-chain data points in comparison to historical patterns:


The buy/sell ratio (30-day moving average) shows seller dominance. After a sharp rise in Bitcoin in March 2024, an overheated market has caused this ratio to drop below 1 as prices fell. Similarly, after Bitcoin reached its all-time high, the market showed signs of overheating again, and the ratio is on a downward trend, indicating that prices may further decline.


The short-term SOPR has fallen below 1, indicating that short-term investors are selling at a loss. This is similar to the downward trend observed in March 2024, which led to a prolonged correction phase. The current downward trend of the SOPR suggests further negative values, which could lead to a larger correction.


Funding rate: Whenever the 30-day moving average of the funding rate trends downward, the funding rate tends to turn negative before a rebound. Currently, the moving average is on a downward trend, indicating that negative funding rates may appear soon, potentially making market sentiment completely bearish before a potential recovery.


While this analysis focuses on short-term price trends, in the long run, Bitcoin may rebound and restore its upward trend after completing the correction phase. Investors should maintain a strategic outlook, avoid reacting to short-term noise, and focus on the broader bullish trajectory.

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