A bitcoin (BTC)-led crypto market correction continued into its third day as the asset lost a further 3.5% in the past 24 hours, nearing $94,000 a week after it came within touching distance of the landmark $100,000 level for the first time.
BTC has pared weekly gains from over 10% to just 3% amid profit-taking on the expected pullback. Major tokens have followed the tumble, data shows, with Solana’s SOL, BNB, Cardano’s ADA and dogecoin (DOGE) falling as much as 7% in the past 24 hours.
The broad-based CoinDesk 20 (CD20), a liquid index tracking the biggest tokens by market capitalization, minus stablecoins, is down nearly 3%.
As such, a short-term target of $100,000 per BTC remains unchanged, with analysts viewing a correction of as much as 10% from the peak (or as low as $92,000) as a “natural phenomenon.”
“This correction occurred due to leverage overheating, as open interest and estimated leverage ratio reached annual highs,” CryptoQuant independent analyst MAC_D said in a Tuesday note. “Therefore, a 10-20% correction can be seen as a natural phenomenon.”
“From an on-chain perspective, cycle metrics such as MVRV, NUPL, and Puell Multiple still indicate that Bitcoin is in a bull market with upward potential. The key here is to identify major accumulation periods during corrections, with the ‘Short-Term SOPR’ metric being particularly useful,” MAC_D added.
The Short-Term SOPR (Spent Output Profit Ratio) looks at whether people who have owned bitcoin for a short time are making or losing money when they sell. CryptoQuant defines short-term holders as those who have held BTC for over 1 hour but less than 155 days.
If the SOPR value is over 1, these holders are thought to be selling their bitcoin for more than they paid (making a profit). If it’s below 1, they’re selling for less (taking a loss). The SOPR value reached 1.096 last week, showing that short-term holders made money and were inclined to sell — contributing to the current weakness in BTC.
However, bitcoin tends to bounce back when short-term holders sell at a loss. And some say this creates a buying opportunity for traders at current levels to reach a potential target of $100,000 and above in the coming weeks.
“The record inflow of stablecoin capital into Binance indicates that we are likely in the midst of, but not near, the end of the current bull market,” Ruslan Lienkha, chief of markets at YouHodler, told CoinDesk in an email. “Bitcoin is undergoing a corrective phase, likely driven by profit-taking, which may result in the price consolidating before a potential move toward the key psychological level of $100,000.”
It’s a ride that some expect to be packed with market volatility.
“It’s going to be extremely choppy markets for crypto in the near future with BTC technicals flashing extremely overbought levels, against an ‘animal spirit’ charged public that’s developing a FOMO appetite for the asset class,” shared Augustine Fan, head of insights at SOFA, in a Telegram message Tuesday.
“We can see a further squeeze on BTC prices to the 120k to 130k area if markets manage to break the 100k wall, but are less sanguine on a smooth ride up with asset markets being overbought across the board,” Fan added.
Source: CoinDesk
