In the rest of the altcoins, the falls are steeper with losses of up to 15% led by Stellar, followed by Dogecoin (-11.1%), PEPE (-10.6%) and Avalanche (-10.3%). .
Why are cryptocurrencies falling?
According to CryptoQuant analysts, These falls do not change the short-term objective of US$100,000 and they believe that a decline to US$92,000 could be considered a “natural phenomenon.” “This correction occurred due to overheating of leverage as open interest and estimated leverage ratio hit yearly highs. Therefore, a 10-20% correction can be considered natural,” they noted.
“From an onchain perspective, cyclical metrics such as the MVRV ratio, NUPL and Puell Multiple still indicate that BTC is in a bull market with upside potential. The key is to identify important periods of accumulation during corrections,” added CryptoQuant strategists. This blockchain analysis firm points out that the ratio of Short-term exit benefit (SOPR) is a “particularly useful” metric to gauge this circumstance.
This metric measures whether people who have held bitcoin for a short time are making or losing money when selling. CryptoQuant defines short-term holders as those who have held BTC for more than one hour, but less than 155 days. If the SOPR value is greater than 1, these holders are considered to be selling their bitcoin for more than what they paid (making a profit). If it is below 1, they are selling for less (taking a loss).
Last week, the SOPR value reached 1.096, which shows that short-term holders made profits and were inclined to sell, contributing to BTC’s current weakness. However, Bitcoin tends to rally when short-term holders sell at a loss. Additionally, some analysts suggest that this creates a buying opportunity for traders at current levels. In fact, some strategists consider that the flow of capital into stablecoins could indicate that the market remains fundamentally bullish.
“There will be extremely volatile markets for cryptocurrencies in the near future, with BTC technical indicators showing extremely overbought levels in the face of a public driven by an ‘animal spirit’ that is increasing FOMO (fear of missing out) for this asset class. “said Augustine Fan, director of analysis at the DeFi firm SOFA.
According to this expert, bitcoin could reach US$120,000 or US$130,000 if it is achieved break the important resistance that it presents at US$100,000. “We are less optimistic about a smooth rise, given that asset markets are generally overbought,” this expert added.
Can more corrections come before reaching $100,000?
Analysts at the financial services platform FalconX pointed out that, as the leading cryptocurrency approaches $100,000, You might be much more sensitive to negative events. This firm highlights that any possible correction or an eventual rise above US$100,000 “could be violent.” This is because the Overall market depth or liquidity has decreased amid the price rally, despite an increase in trading volumes.
Beyond this point, news worth noting is that MicroStrategy has made another important purchase of BTC, adding 55,500 tokens for US$5.4 billion. This operation brings its holdings to 386,700 BTC valued at US$38 billion.
Source: Ambito
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