The recent Bitcoin [BTC] price stability between $19,000 and $22,000 has primarily benefited short-term traders. Chartoday, a member of the CryptoQuant team, has publicly stated this view.
His analysis on CryptQuant suggests that traders holding Bitcoin for less than a year have not suffered major losses since June.
The analyst also pointed out that long-term holders were responsible for a portion of the BTC price drop. In addition, a bearish divergence indicated that relief was unlikely in the near future.
However, the Spent Output Profit Ratio shows that short-term traders have made some money recently (SOPR). Long-term investors, meanwhile, were in jeopardy of giving up even more ground.
The Spent Output Profit Ratio, however, shows that short-term traders have made some money recently (SOPR). Long-term investors, meanwhile, were in danger of giving up much more ground.
Though not solely attributable to the SOPR, BTC’s current price is the result of a number of interrelated factors. According to Chartoday, Bitcoin could follow the 2018 capitulation trend, in which the king currency sank from $6,000 to $3,000. BTC was at risk of further decrease in the mid- to long-term due to the fact that the Miner Position Index (MPI) was only slightly above the June 2022 capitulation.
At the time of publication, the long-term SOPR indicated that BTC was making plans for further concessions. Based on data provided by CryptoQuant, the long-term SOPR, which pointed to profits when it hit 1.436 on October 18th, has significantly dropped since then.
The SOPR was 0.525 at the time this was published. Because of the drop, it seemed unlikely that long-term BTC investors would make a significant profit in the next month. More importantly, this appeared to corroborate the analyst’s conclusion that these investors were hesitant to add to their BTC holdings.
What can be done to stop the storms?
Futures traders still retained an interest in trading bitcoin despite its wildly fluctuating price. Glassnode reports that after dropping on October 19th, overall futures volume has increased. As of this writing, $25.82 billion had been transacted.
This rise revealed that despite the BTC price being $19,162, traders were optimistic about making a profit. Despite the current uptick in activity, liquidations have fallen short of the prior day. Even so, it’s possible that the derivatives market’s biggest winners aren’t the long-term investors.
Contrary to popular belief, the BTC/USD chart may disagree. If the four-hour chart was any indication, Bitcoin would keep its downward momentum for the time being. This was due to the blue 20-week EMA falling far below the red 50-week EMA (yellow). Investors may have had a reprieve in the longer 200-week period. If the 200 EMA keeps increasing and crosses above the 20 and 50 EMA, we may see a bullish trend in BTC. So, long-term investors may still have reason to believe in a rebound.