- Bitcoin is making promising gains as the CPI index favors cryptocurrencies.
- Short-term holders face challenges amid Bitcoin’s continued volatility.
Amid the roller coaster ride of Bitcoin’s value, the Consumer Price Index (CPI) seemed to smile at it and certain other cryptocurrencies, ushering in some promising gains.
However, this hopeful trend was quickly interrupted by a widespread rumor that the United States was going to divest from Bitcoin, partially eroding the gains made.
Given the continued volatility Bitcoin was experiencing, individuals holding their investments short-term were in a precarious position, potentially facing some challenges ahead.
Read Bitcoin (BTC) Price Prediction 2023-24
Bitcoin SOPR is falling
March 18 marked the high of the latest Bitcoin SOPR (Spent Output Profit Ratio) index, with an impressive 1.07. The index remained consistently high over the following period, suggesting that short-term investors who held onto their coins for less than six months enjoyed remarkable profitability on average.
The short-term SOPR metric focused on coins held for an hour to less than 155 days. It provided insight into trading profitability among investors who previously held onto their coins.
Source: CryptoQuant
However, the current state of affairs paints a different picture. At the time of writing, the short-term SOPR index has fallen below the critical threshold of 1 and is now at 0.99 per CryptoQuant facts.
This drop signaled a shift in Bitcoin’s price, accompanied by short-term investors realizing their gains. Consequently, what was once an average profit or neutral position had turned into actual losses for these investors.
Bitcoin Cost basis means little delay
Despite the recent dip in Bitcoin’s price, data from Glasnode offered some consolation to short-term holders. The cost-base measure showed an encouraging trend in the short-term realized price, which continued to rise.
The chart showed a significant upward repricing of the Short-Term Holder Cost Basis over the past few months. It also showed the average purchase price of short-term holders approaching the current spot price.
The short-term realized price of Bitcoin serves as a benchmark to measure the average purchase price of Bitcoin that has recently been sold or transferred within a short time frame.
It shows the average profit or loss of coins held for a relatively short period of time. When Bitcoin’s realized short-term price rises, it means that recent buyers are selling their coins for a profit. This upward trend may indicate a bullish market or the realization of profits by traders who have made recent investments.
Slight BTC overvaluation on the MVRV ratio
According to Santiment’s Bitcoin 90-day Market Value to Realized Value (MVRV) ratio, BTC still showed a slight overvaluation.
The statistic indicated that BTC remained above the zero line, hovering around 1.4% as of the current update. This suggested that despite the prevailing downtrend, holders were still holding their positions at modest gains during this period.
Source: Sentiment
How much are 1,10,100 BTC worth today?
While BTC has faced challenges recently, short-term holders are not in a completely unfavorable situation. With a slight price increase, their profitability would improve further.