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4 measurements suggest that the Bitcoin price will correct – but can BTC reach $ 20,000 first?

A withdrawal in the price of Bitcoin (BTC) is likely based on several data points on the chain, namely the indicator of used output profit (SOPR), stablecoin inflow, stacked sales orders of $ 19,000 and Crypto and Fear Index. The question, however, is when this correction would take place.

Profit withdrawal possible with lower purchase pressure

The SOPR indicator essentially measures how profitable Bitcoin holders are at the moment. When SOPR is high, BTC risks a pullback as traders tend to sell when they are making a profit.

Adjusted Bitcoin SOPR. Source: Glassnode

Meanwhile, stablecoin inflows show how many stablecoins, such as USDT Tether, are floating to exchanges. When the stablecoin inflow increases, it typically means that buyer demand increases. On the other hand, the selling pressure tends to increase when BTC reserves exceed the inflow of stack coins.

Over the last few days, the SOPR indicator has reached a level that previously led the price of Bitcoin to correct as at the end of 201

8 and the summer of 2019.

On November 20, Rafael Schultz-Kraft, Chief Technical Officer of Glassnode, noted:

“Adjusted SOPR (hour, 7d MA) as high as it has not been since July 2019. Correction in-depth?”

This trend could become worrying if the momentum in Bitcoin declines. Renato Shirakashi, the creator of the SOPR indicator, said Nobel Prize winner Daniel Kahneman’s work shows that investors are comfortable selling when they are in profit.

Therefore, if Bitcoin becomes stagnant or consolidates in the short term below the $ 19,000 resistance, a minor withdrawal may occur. Shirakashi wrote:

“People are generally much more comfortable selling when they make a profit. In a bull market, when SOPR falls below 1, people would sell at a loss and thus be reluctant to do so. This pushes supply significantly down, which in turn puts upward pressure on the rising price. ”

The rise in the Exchange Stablecoins Ratio from CryptoQuant coincides with the rising SOPR. The Stablecoins ratio is Bitcoin foreign exchange reserves divided by stablecoin reserves. As it rises, it shows that the potential sales pressure is rising.

Stablecoins ratio for BTC. Source: CryptoQuant

As such, CryptoQuant CEO, Ki Young Ju, expects a short-term, though not a major correction, in the short term. He noted:

“BTC’s potential sales pressure is going up, but still low. We’ll see some corrections in a few days, but it will not be big. Long term bullish. ”

$ 19,000 stands in the way of a new record high

Exchange order books also show that the $ 19,000 level has become a major area of ​​resistance. There are significant sales orders across Bitfinex, Bitstamp, Binance and Coinbase near $ 19,000, which could prevent a rally from continuing.

Another possible factor that could trigger a short-term withdrawal is the Crypto Fear and Greed index. The index is still at dangerously high levels, which increases the likelihood of a correction.

The correction may come later

Over the past few months, however, stock market Bitcoin reserves have been in a continuous downward trend, as Cointelegraph reported. This could offset a major correction in the market, especially if the BTC bull run accelerates, triggering FOMO, which means a large influx of new buyers.

Year to date, Glassnode found that the balance of Bitcoin on exchanges fell by 18%. The continuous decline in foreign exchange reserves reduces the likelihood of deep withdrawals, which analysts like Ki have consistently emphasized in November.

Bitcoin balance when exchanging 90-day moving averages. Source: CryptoQuant

In addition, there are other factors that can delay the correction until Bitcoin breaks $ 19,000 or potentially even $ 20,000.