Economic data and general profit-taking may have brought an early bitcoin (BTC) rally, but data tracking investor behavior indicates that buying current price levels could benefit those looking for an entry into the BTC markets.
Onchain data shows that bitcoin’s Spent Output Profit Ratio (SOPR) has crept up to 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 recoveries, indicating a potential buying opportunity.
Other well-followed cycle indicators such as market cap to realized value and Puell multiple and a short-term investor ratio of 60% point to the market not having peaked and this week’s correction does not appear to signal the end of the bullish cycle, per . CryptoQuant Contributing Analyst Mac_D.
“As short-term investors experience more pain, it often provides better opportunities for accumulation,” MAC_D said in a Thursday note. “If there are further declines from the current price, smart investors are likely to accumulate the coins that are being sold cheaply by short-term investors. Therefore, selling coins at this time may turn out to be a very unwise decision.”
SOPR measures the profit or loss of used bitcoin output by comparing the value of coins when they were last moved to their value when they are used again. The short-term SOPR focuses on coins that move within a relatively short time frame (less than 155 days) and can indicate market sentiment, where a value less than 1 could indicate capitulation or a market bottom, potentially signaling a good time to buy.
MVRV compares Bitcoin’s total market capitalization (market cap) to the “realized cap,” which values each Bitcoin at the price it last moved to. It is used to measure whether Bitcoin is overbought or oversold, helping to predict potential market tops or bottoms.
BTC approached $95,000 in European morning hours on Friday, after a drop in US hours sent it to nearly $90,000 late Thursday, down 10% from a weekly high above $120,000.
Fresh economic data sent U.S. Treasuries soaring on Thursday, leading to a drop in stocks and a simultaneous decline in risk assets such as bitcoin. The latest report from the Institute for Supply Management (ISM) on US service providers was stronger than expected, and the price-paid measure reached its highest point since early 2023.
Traders are eyeing the release of US non-farm payrolls (NFP) later Friday before further positioning, CoinDesk reported. Strong NFP numbers indicate a robust economy, hinting at possible interest rate hikes, which tends to be bad for risk assets like bitcoin.
