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Three Bitcoin (BTC) On-chain Indicators Signalling Continuation Of Bearish Sentiment

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VOC, Voice of Crypto, Bitcoin, BTC

On-chain indicators are absolutely crucial to studying the impact of blockchain activity in the crypto markets. They not only paint a clearer picture of what’s happening behind the scenes but also can be used to create charts and dashboards that open a world of perspective for knowledge hunters.

Long Term Holder SOPR

Currently, crypto markets are going through a Capitulation phase, the signs are clearly evident when massive losses are inflicted on the market players. To add to that, if there’s a bear market, a multi-year capitulation can be identified if long-term holders are in red.

 

 

The given chart clearly demonstrates the situation of long-term holders as the data shows the SOPR line falling which means the long-term players capitulating and selling the holding asset at a loss to the new market participants who usually are in the hunt for an undervalued price range for the concerned asset.

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Such new players in the market are often referred to as the ‘smart money.’

As clearly the chart shows that the long-term capitulation phase has begun presenting an attractive cheap cop opportunity for bargain hunters for the coming month ahead.

Net Unrealized Profit/Loss

NUPL is basically the difference between market cap and realized cap then divided by market cap. It could be represented as a ratio of the market players who are in profit.

 

Currently, the NUL reading stands at 0.22132533.

By observation of charts, it is derived that an increasing NUPL trend means increasing selling pressure as more and more people tend to be in profit, they usually sell out on their positions to book the profit earned.

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Since November 2021, the NUPL trend has been on a downward path, this gets deciphered as the decrease in the selling pressure adds to the proximity to the cheap cop phase where market players will begin stacking on sats.

Funding Rates

Next up on the significance is the funding rate. According to crypto quant funding rates are “Periodic payments either to traders that are long or short based on the difference between perpetual contract markets and spot prices.”

They are a direct measure of market sentiment in the perp swaps market.

Positive funding rates mean there is a net dominant long position in the market and long pays a premium percent to shorts and vice versa for negative funding rates.

 

Currently, the funding rates are positive at 0.00090034 and are usually a sign of a stagnant market. Usually, in general, market conditions, a push upward can be expected when negative funding rates close around -0.01.

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Jatin Sewani is crypto markets writer/reporter based in India. He is skilled in onchain as well as technical analysis. He's currently pursuing actuarial science which lets him look at things from a risk-based perspective.

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