- An increase in UTXO profit could lead to a price correction.
- The STH-SOPR signals that it is time for short-term investors to exit the market.
Bitcoins [BTC] Last year's good performance brought profits to many holders who suffered from the bear market of 2022. However, the current level of Unspent Transactions Output (UTXO) in profit may have put the price of BTC at risk, AMBCrypto has found.
The UTXO in Profit represents the percentage of coins whose value when created was lower than the current value. On the other hand, UTXOs in Loss are coins with a lower value than when they were created.
For the uninformed, these metrics can be crucial in identifying market highs and lows. At press time, data from CryptoQuant showed that UTXO gains had increased to 88.63%.
Source: CryptoQuant
More winnings mean more losses
In past cycles, Bitcoin price corrected when UTXO profit reached 95%. So if the coin price increases and more UTXOs surge, there may be a significant decline. This assumption was also confirmed by SimonaD, an on-chain analyst.
SimonaD, who published her analysis on CryptoQuant, noted that:
“The last time the market had the metric in a high state, indicating over 95% of UTXOs were making gains, was during the top bull market of 2021. This means we should pay close attention to this area if it will be touched and crossed in the near future.”
AMBCrypto then checked whether traders were exercising caution. However, the estimated leverage ratio (ELR) suggests otherwise. The ELR shows the average leverage that traders use in the market.
A falling ELR suggests that traders are taking risks with low leverage. However, at press time, Bitcoin’s ELR had increased. This increase suggests that traders have bet heavily on the price movement.
Source: CryptoQuant
Not a good time of year to buy
But are these traders making long or short bets? Well, the long/short ratio at the time of writing was 1.08. The data indicated by the metric showed that 50.21% of Bitcoin traders chose to open a position that predicted a price increase.
On the other hand, 49.79% of open positions within 24 hours were short positions. A scenario like this suggests that traders are uncertain about which direction BTC could be heading. Currently, BTC could continue to trade sideways, leaving long and short positions at risk of liquidation.
Source: Coinglass
How about Short-Term Holders (STH)? Data evaluated by Glassnode showed that Bitcoin’s STH-SOPR had increased to 1.02.
The STH-SOPR evaluates the behavior of short-term investors based on sentiment displayed within 155 days. STH-SOPR values below 1 indicate a good entry for buyers.
Is your portfolio green? Check out the BTC profit calculator
So the Bitcoin STH-SOPR at press time suggests it might be time to exit the market. For now, Bitcoin price could fall to $42,000.
However, a bull market is widely expected in 2024, which could push the price to a new all-time high (ATH).
Learn Crypto Trading, Yield Farms, Income strategies and more at CrytoAnswers
https://nov.link/cryptoanswers
Comments are closed.