Based on on-chain analysis charts, it can be seen that the current Bitcoin market is in an important phase, with many signals from the indicators reflecting the sentiment and behavior of investors.

1. On-chain Metrics Chart

Key indicators on the chart include:

• MVRV (MA7):

The current high MVRV level indicates that most investors are making significant profits. Historically, when MVRV reaches high levels, the market often faces profit-taking pressure.

• SOPR (MA7):

The SOPR index > 1 is a signal that investors are selling for profit. This reflects the market's optimistic sentiment but may also indicate that the market is approaching saturation.

• CDD (MA90):

The increase in CDD indicates that long-term investors are moving and selling coins more, which often happens during profit-taking cycles at high price levels.

Observation: Current on-chain indicators all reflect the market's excitement but also carry short-term risks if selling pressure increases.

2. True Market Mean Price and AVIV Ratio

• True Market Mean Price:

This is the long-term average price of Bitcoin, calculated based on on-chain data. The price moving far above this average indicates that the market is overvalued compared to its true value, but it may continue to rise if demand is strong.

• AVIV Ratio:

This index reflects Bitcoin's growth and correction cycles. When the AVIV Ratio approaches its peak, the market often faces the risk of correction. History shows that peaks in the AVIV Ratio coincide with periods when the market struggles to maintain its upward momentum.

Observation: The AVIV Ratio warns that the market is in a high-risk zone, but this does not necessarily mean an immediate reversal.

3. Sharpe Ratio

• Sharpe Ratio:

This index measures expected returns relative to risk. When the Sharpe Ratio enters the 'High Risk' zone, the market often has a higher potential for correction. However, in previous cycles, when this index returns to the safe zone, the market typically establishes the next long-term upward trends.

Observation: The Sharpe Ratio recommends that investors need to manage risk tightly when the market is at the current stage.

Strategy and Actions

1. For long-term investors:

• Focus on restructuring the portfolio, prioritizing the maintenance of safe positions and reducing high-volatility assets.

• Closely monitor on-chain indicators like SOPR and MVRV to identify reversal signals.

2. For short-term traders:

• Take advantage of market fluctuation zones for trading, but limit the use of high leverage.

• Carefully observe support and resistance levels based on capital flow and long-term investor behavior.

3. Risk management:

• Set stop-loss orders and manage capital tightly, especially during periods of high volatility.

• Only execute trades with a high probability of success, based on clear signals from the indicators.

Conclusion

Current on-chain indicators show that the Bitcoin market is in a state of high excitement but also carries many short-term risks. Investors need to be patient, flexible, and closely follow the developments of the indicators to make reasonable decisions.$BTC