Economic data and general profit-taking may have weighed on an early Bitcoin (BTC) rally, but data tracking investor behavior indicates that buying at current price levels could benefit those looking to enter the BTC markets. .
On-chain data shows that bitcoin’s spent production profit ratio (SOPR) has risen as high as 0.987 as of Friday, suggesting that investors who have held bitcoin for less than six months are selling at a loss. Historically, this scenario has often preceded price rallies, indicating a potential buying opportunity.
Other well-tracked cycle indicators, such as market value over realized value and the Puell multiple, and a short-term investor ratio of 60% point to the market not having peaked, and this week’s correction It doesn’t seem to mean the end. of the bullish cycle, according to CryptoQuant contributing analyst Mac_D.
“As short-term investors experience more difficulties, better accumulation opportunities often present themselves,” MAC_D said in a post on Thursday. “If there is a further drop from the current price, smart investors will probably accumulate the coins sold cheaply by short-term investors. Therefore, selling coins at this time could prove to be a very unwise decision.”
SOPR measures the gain or loss of bitcoin production spent by comparing the value of the coins when they were last moved to their value when they were spent again. The short-term SOPR focuses on coins moved in a relatively short period of time (less than 155 days) and can indicate market sentiment, where a value less than 1 could suggest a capitulation or market bottom, which could indicate a good time to buy.
MVRV compares Bitcoin’s total market capitalization (market value) to the “realized limit,” which values each Bitcoin at the price it last moved at. It is used to measure whether Bitcoin is overbought or oversold, which helps predict possible market highs or lows.
BTC approached $95,000 in European morning hours on Friday after a drop in US time sent it near $90,000 on Thursday evening, down 10% from a weekly high of more than $120,000.
New economic data sent US Treasury yields soaring on Thursday, leading to a drop in stocks and a simultaneous drop in risk assets like bitcoin. The Institute for Supply Management’s (ISM) latest report on US service providers was stronger than expected, with the measure of prices paid reaching its highest point since early 2023.
Traders are keeping an eye on the US Nonfarm Payrolls (NFP) release later on Friday before further positioning, as CoinDesk reported. The strong NFP numbers indicate a robust economy, suggesting potential interest rate increases, which tends to be bad for risk assets like bitcoin.
