Bitcoin is more than just a cryptocurrency and store of value. For many people it is the regular source of income. When China “banned” mining in the country, the effects were felt around the world. In fact, the impact was big enough to correct the price of Bitcoin for a short period of time.
However, in the past 24 hours, the markets have done well, with BTC up 7.9%. However, why are short term traders still wary of investing in BTC? You can find the answers in these metrics.
Is Bitcoin Bad In The Short Term?
Possibly. Due to its high price compared to other cryptocurrencies, even the strongest bursts of volatility that other altcoins can break don’t necessarily have a huge impact on the King Coin. So if the numbers show that short-term owners are not currently making profits, it needs to be viewed with some seriousness.
Looking at the ratio of market value to realized value (MVRV) of the short-term holders, it seemed obvious that losses dominated profits. The low values of the MVRV Ratio indicated that Short Term BTC was HODLing at a lower price than the purchase price. Accordingly Glass knot, “In bearish trends, this has typically coordinated with surrender events.”
Bitcoin STH MVRV | Source: Glass knot
In addition, the SOPR (Spent Output Profit Ratio) can also be considered, a strong metric that underlines the health and condition of the market. If the indicator is below 1, it is evidence of the bearish hues of the market division. With a few minor spikes, the metric has largely stayed below the line since the second half of May. Bitcoin SOPR | Source: Glass knot – AMBCrypto
Still, it’s worth noting that BTC appeared to have gained some momentum at press time, with BTC trading well above $ 32,000. However, a sustained run above this level would be required before the above metrics register a U-turn.
So what about the investors?
That’s definitely a huge driving force for any asset at the end of the day. Hence, it is necessary to measure investor sentiment to see where BTC is headed. The reserve risk is a good measure of this aspect. When the indicator is low, it is much more attractive to long-term HODLers, while high ranges are a call for short-term investors.
On the chart, the continuously falling reserve risk underscored the high level of confidence in BTC in the former, but the opposite appeared to be the case with the latter. Bitcoin reserve risk | Source: Glass knot – AMBCrypto
Finally, by observing the average sentiment of Bitcoin, one can see how terribly negative the sentiment has been lately. After hitting new highs in May at the time of BTC’s ATH, the indicator has now fallen to a 10-month low. Such negative feelings are a sign of how weak short-term investor confidence in BTC is right now.
Ergo, tracking these metrics can be insightful in making informed investment decisions.