- BTC price is up 40% since January 1st.
- Investors have seen significant gains and now a price reversal could follow.
Hand exchange priced at $23,200 at press time, leading coin Bitcoin [BTC]is currently trading at levels last seen in August 2022. Year-to-date, the price of BTC is up 40%, according to data from CoinMarketCap.
The growth in BTC price, which shares a statistically significant positive correlation with several other assets in the market, has seen several other crypto assets appreciate in value over the past month.
According to data from CoinGecko, the global cryptocurrency market cap has increased by 21% in the last month.
How much is 1.10.100 BTC worth today?
Owners benefit, but for how long?
BTC’s rally to a five-month high over the past month has prompted many of its holders to post gains on their BTC holdings. This resulted in an estimate of the cost basis for short and long-term owners.
The cost basis for each BTC holder is the average purchase price of the BTC they own. This takes into account any fluctuations in the BTC price at the time of purchase. This cost basis determines capital gains or losses when selling the BTC.
According to Twitter analyst Will Clemente, the cost basis for short-term and long-term BTC holders was $18,900 and $22,300, respectively.
However, as BTC’s price has rallied past those points, these cohorts of investors “were no longer underwater,” Clemente said.
Bitcoin has now reclaimed its long-term holder cost basis ($22.3K) in addition to its short-term holder cost basis ($18.9K) and aggregate cost basis. Change in behavior as holders are no longer underwater overall.
The last three instances where this happened are below: pic.twitter.com/8fCSyU5sqk
— Will Clemente (@WClementeIII) January 29, 2023
Also CryptoQuant Analyst Phi Deltalytics assessed BTC’s short-term spent output profit ratio (SOPR), noting that “sentiment among bitcoin’s short-term on-chain participants has reached its greediest level since January 2021.” According to the analyst, the SOPR was well above the bullish line of one, indicating an overly tight market.
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Deltalytics further noted that without an increase in stablecoin reserves on spot exchanges, the uptrend could be short-lived.
A look at the Crypto Fear & Greed Index confirmed the analyst’s position. At press time, the index showed that greed had permeated the cryptocurrency markets.
When the index is in the “greed” zone, it means that investors have become increasingly confident and optimistic about the market and may be more willing to take risks.
This also suggests that prices are overvalued and a market correction may be imminent.
An assessment of BTC’s movement on the daily chart confirmed the possibility of a price correction. Since Jan. 21, the king coin has been trading in a tight range.
When the price of BTC fluctuates within a narrow range, it means that the price is not making any significant moves in either direction and is moving in a relatively narrow band.
An analysis of BTC’s Money Flow Index (MFI) and Chaikin Money Flow (CMF) indicators raised further concerns as these technical indicators have been trending down since Jan. 21.
The tight range in BTC price combined with downtrends in MFI and CMF suggested a lack of buying momentum and potential for increased selling pressure.
This also indicated that the market was likely to break out of the tight range to the downside.
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