Bitcoin Nears $95K as Indicators Signal Potential Buying Opportunity Amid Market Correction
Bitcoin (BTC) hovered near $95,000 during European morning hours on Friday after a sharp drop during U.S. trading hours on Thursday pushed it to just above $90,000, marking a 10% decline from a weekly high above $120,000.
Economic data and profit-taking appear to have dampened the earlier rally. However, key on-chain data suggests current price levels might present a compelling entry point for investors looking to buy into BTC markets.
On-Chain Metrics Indicate Potential Recovery
Bitcoin’s Spent Output Profit Ratio (SOPR) has risen to 0.987 as of Friday, suggesting that short-term holders—those who have held bitcoin for less than six months—are selling at a loss. Historically, such scenarios often precede price rebounds, highlighting a potential buying opportunity.
Other cycle indicators, including Market Value to Realized Value (MVRV), the Puell Multiple, and a short-term investor ratio of 60%, suggest the market has not reached its peak. According to CryptoQuant analyst Mac_D, this week’s correction likely does not mark the end of the current bullish cycle.
“As short-term investors face increased losses, this creates favorable conditions for accumulation,” Mac_D noted in a Thursday post. “Should prices decline further, savvy investors may capitalize on coins sold cheaply by short-term holders. Selling at this stage could prove to be a regrettable decision.”
What SOPR and MVRV Reveal
SOPR tracks the profit or loss of spent bitcoin outputs, comparing the value of coins when last moved to their value when spent again. A value below 1 typically signals capitulation or a market bottom, potentially indicating a buying opportunity.
MVRV, on the other hand, compares Bitcoin’s total market cap to its realized cap (valuing each Bitcoin at its last moved price). This metric helps identify whether Bitcoin is overbought or oversold, providing insights into market tops or bottoms.
Macro Pressure Hits Bitcoin
BTC’s decline coincided with fresh economic data from the U.S. that drove Treasury yields higher on Thursday. Rising yields pressured equities and risk assets, including bitcoin. The Institute for Supply Management’s (ISM) report showed stronger-than-expected performance in the U.S. service sector, with the prices-paid index reaching its highest level since early 2023.
As traders brace for Friday’s release of U.S. non-farm payrolls (NFP), the market remains cautious. Strong NFP data could point to a resilient economy and potential interest rate hikes, which often weigh on risk assets like bitcoin.
Despite the volatility, on-chain indicators and historical trends suggest that Bitcoin may be approaching a pivotal accumulation phase, offering long-term investors a strategic buying opportunity.
