Posted:
- An increase in UTXO in Profit can 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 showing saw many holders who suffered from the 2022 bear market book profits. However, the current state of Unspent Transactions Output (UTXO) in Profit could have put BTC’s price at risk, AMBCrypto found.
The UTXO in Profit represents the percentage of coins whose value was lower when it was created compared to its current value. On the other hand, UTXOs in Loss are the coins that have a lower value than when they were created.
For the uninformed, these statistics can be crucial in identifying the tops and bottoms of the market. At the time of writing, CryptoQuant data showed that the UTXO in Profit had increased to 88.63%.
Source: CryptoQuant
More profit means more disadvantage
In previous cycles, when the UTXO reached 95% in gains, the Bitcoin price corrected. So if the coin price rises and more UTXOs make profits, there could be a notable pullback. This idea 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 benchmark high, indicating that more than 95% of UTXOs made profits, was during the biggest bull market of 2021. That means we need to keep a close eye on this area as it moves forward in the coming period is touched and passed over.”
AMBCrypto then went ahead to check if traders were being cautious. However, the Estimated Leverage Ratio (ELR) indicated otherwise. The ELR shows the average leverage used by traders in the market.
A declining ELR suggests traders are taking low-leverage risks. However, at the time of writing, Bitcoin’s ELR had increased. This increase indicates that traders were betting big on the price action.
Source: CryptoQuant
Not a good season to buy
But are these traders taking long or short bets? Well, the long/short ratio value at the time of writing was 1.08 at the time of writing. The data from 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 the 24-hour open positions were shorts. A scenario like this indicates that traders are uncertain about the direction in which BTC might move. As it stands, BTC may continue to trade sideways, putting long and short positions at risk of liquidation.
Source: Coinglass
What about short-term holders (STH)? Data evaluated by Glassnode showed that Bitcoin’s STH-SOPR had risen to 1.02.
The STH-SOPR assesses the behavior of short-term investors based on the sentiment shown within 155 days. Values of the STH-SOPR below 1 indicate a good entry point for buyers.
Is your portfolio green? Check the BTC profit calculator
So the Bitcoin STH-SOPR at the time of writing indicates that it could be time to do so Exit the market. For now, Bitcoin’s price could drop to $42,000.
However, there is widespread anticipation of a bull market in 2024 that could send the price to a new All Time High (ATH).