Bitcoin (BTC) has recently hit its lowest level since February 26, causing concern among investors. However, Bitfinex analysts have identified on-chain signals that suggest the leading cryptocurrency may be on the verge of a turnaround. Despite recent volatility and market fear, there are indications that BTC may not experience any further significant dumps in the near future.
The recent correction in Bitcoin’s price was partly attributed to the significant BTC sales by the German law enforcement agency, Bundeskrimanalamt (BKA), and the ongoing Mt Gox creditor redemptions. These movements of large amounts of BTC to exchanges have led to increased market uncertainty and fear. However, analysts believe that the impact of these sales may not be as severe as initially thought, as the actual amount of BTC sent to exchanges is relatively low.
Despite the ongoing pressure from large BTC sales, there are several on-chain indicators that suggest the market may be on its way to recovery. The Coinbase Premium Index, which measures the difference in BTC price between Coinbase Pro and other exchanges, has shown a positive trend. This indicates a decrease in selling pressure on Coinbase, a positive sign for market stability.
Another important indicator is the Spent Output Profit Ratio (SOPR) for short-term holders, which has reached a value of 0.97. This suggests that investors in this cohort are selling BTC at a loss, often preceding a price rebound. Additionally, the average funding rate for all BTC perpetual trading pairs has turned negative for the first time since the May 1 bottom. This further supports the idea that Bitcoin may be stabilizing or approaching a local bottom.
Market Sentiment
While the market sentiment has been affected by recent events, including the large BTC sales and creditor redemptions, there is a sense of optimism among investors. Many believe that any recovery in Bitcoin’s price will come after the market absorbs the current supply overhang. However, Bitfinex analysts suggest that the market could recover sooner than expected, as the impact of the sales has already been factored into the price.
The future of Bitcoin remains uncertain but optimistic, based on the analysis of on-chain indicators. Despite recent price corrections and market volatility, there are signs that Bitcoin may be on the path to recovery. Investors are advised to keep a close eye on these on-chain metrics to gauge the market’s direction in the coming days and weeks.
Leave a Reply