While most of the people reading this article are probably familiar with the tweets Elon Musk sent about Bitcoin mining, his comments are just plain noise, and the resulting drop in prices and the liquidation of the derivatives market offer investors who may be looking for an attractive one Waiting moment Enter positions with a great opportunity.
The long-term trends seen in and around the Bitcoin space remain extremely bullish, and the recent three-month consolidation can be seen as UTXOs simply transitioning from weak to strong hands as short-term leveraged traders in derivatives markets move up Bitcoin prices have broken down in the range of $ 44,000 to $ 64,000.
Short-term HODLer SOPR: Flashing buy signal
Short-term HODLer SOPR (36h MA)
Given that short-term traders are putting price on margin during this consolidation period, it makes sense to look at the short-term HODLer SOPR, which measures the profit-to-loss ratio of issued UTXOs that are less than 155 days old.
Over the past six months, any hindsight SOPR interruption has been an attractive buying opportunity for investors, and this week’s move shouldn’t be treated any differently.
An SOPR value of less than one means that the coins moved on that day are on average sold at a loss (the price sold is lower than the price paid). So when the SOPR drops below one, it is a signal for the short-term market actors to capitulate.
Derivatives Markets: Short-term tail wagging the dog
Cross-exchange interest rate for futures on all exchanges since November 2020
While the long-term price movement is driven by the world’s money preferences changing from fiat money to BTC, the short-term price movement is driven by the leverage and derivatives markets. During this bull market, there have been very few instances where funding from the Perpetual Futures markets has been negative for an average of more than 12 hours. It did so earlier this week and gave investors a screaming buy signal.
Total long liquidations via Bitcoin exchanges
Big retreat after the sell-off
Immediately after the cascade of liquidations and the sharp correction in Bitcoin price to $ 45,000, a massive outflow of Bitcoin was observed, leaving the exchanges, an indication that some big time gamblers were breaking out due to the sell-off. While this is pure speculation, it wouldn’t surprise me at all if the FUD (read: Fear, Uncertainty, and Doubt) that threw it all out towards the end of this week was just a coincidence.
Short-term ratio of HODLer’s market value to realized value
Short-term HODLer MVRV
The short-term ratio of HODLer’s market value to realized value has fallen significantly compared to the beginning of January. While the market capitalization multiplies the market price of Bitcoin by the total outstanding offer, the realized upper limit takes into account the price at which the coin was last taken into account in the calculation. If you take the ratio of market capitalization to realized cap, you get MVRV. In this case, UTXOs (Bitcoin) are measured that moved less than 155 days ago. This metric can give you an idea of whether the market is above “fair value” in relation to the short-term price movement that has been driven primarily by speculators in the derivatives markets in recent months.
The short term lower MVRV trend is very bullish and the lower it goes should give investors confidence that the next Bitcoin surge is closer than ever.
Despite months of price volatility, the long-term outlook has never been more optimistic, and events like a legendary Wall Street investor asking the dollar to lose reserve currency status won’t even get the top mention of the week.
Keep piling up your sats friends or someone else will.
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