10 January 2025
Bitcoin market performance has faced a challenging start to the year, marked by a lesser upsurge and more bearish sentiment. Amid these fluctuations, insights from CryptoQuant analyst Avocado Onchain shed light on the current state of Bitcoin’s price movements and the factors influencing them.
In a post titled “Bitcoin Price Correction: Short-Term Volatility Amid Long-Term Bullish Outlook,” Avocado analyzed key on-chain metrics, highlighting trends that may define Bitcoin’s immediate and future trajectory.
On-Chain Metrics Hint At Bitcoin’s Next Move
The analyst pointed out that the ongoing decline in Bitcoin’s price has been fueled by several factors, including uncertainty surrounding Federal Reserve rate adjustments, cautious market behavior ahead of political transitions, and concerns over state-held Bitcoin sales, which historically emerge during correction periods.
These elements have combined to push market sentiment toward bearish territory. However, Avocado emphasized that the short-term outlook does not necessarily overshadow Bitcoin’s long-term potential for recovery and growth.
Avocado’s analysis utilized on-chain data to assess the possibility of additional price corrections. One of the primary indicators examined was the Taker Buy/Sell Ratio (30-day moving average), which revealed a dominance of sell-side activity.
Following Bitcoin’s price surge in March 2024 and its recent all-time high, this ratio trended downward, signaling an overheated market. This pattern historically precedes periods of price decline, indicating potential for further corrections.
Another metric, the Short-Term Spent Output Profit Ratio (SOPR), which measures short-term investors’ profitability, has dropped below 1. This indicates that many short-term holders are selling at a loss, a behavior that has been observed during prior correction phases.
Similarly, the Funding Rates (30-day moving average), a measure of market sentiment among leveraged traders, is trending downward. Negative funding rates often precede a bearish market shift but can also pave the way for eventual recovery once sentiment stabilizes. Avocado wrote:
While this analysis focuses on short-term price movements, Bitcoin is likely to rebound in the long run and resume its upward trend after completing the correction phase. Investors should remain strategic, avoid reacting to short-term noise, and focus on the broader bullish trajectory.
Bitcoin Market Performance
Meanwhile, Bitcoin has continued to demonstrate bearish movements especially with its price now trading for $92,317, at the time of writing down by 3.3% in the past day.
One of the major factors that have contributed to the ongoing bearish sentiment in the Bitcoin market appears to be the resurfacing of the US government wanting to sell the seized BTC from Silk Road which now amounts to roughly $6.5 billion.
The US Govt has been given the greenlight to liquidate 69,000 BTC ($6.5B) from Silk Road, an official confirmed to DB News today
Interesting situation less than 2 weeks away from the new admin who vowed to not sell https://t.co/HqD1KnhJK3 pic.twitter.com/xn8ATSEL7H
— db (@tier10k) January 9, 2025
Featured image created with DALL-E, Chart from TradingView