Bitcoin (BTC) has experienced a resurgence, trading just above $99,000 after a notable drop earlier in the week. This recovery aligns with the latest data from the US Consumer Price Index (CPI), prompting analysts to keep a close eye on critical indicators to forecast the market’s next steps.
A contributor from CryptoQuant has shed light on Bitcoin ’s recent market trends, emphasizing the Short-Term Spent Output Profit Ratio (SOPR). This metric has historically displayed a consistent trend during phases of market correction. The observed pattern typically indicates a temporary decline in market optimism, followed by a rebound. Despite the recent downturn, indications suggest a possible return to an upward trajectory in the near future.
The Short-Term SOPR provides valuable insights into the behavior of market participants during periods of price correction by measuring the profitability of spent outputs against their realized value. It has been noted that during corrections, the SOPR moves between red and green zones. A shift to the red zone usually indicates heightened profit-taking activity, particularly from larger investors, often prolonging the correction. Conversely, a green zone signifies a reduction in selling pressure, paving the way for potential price recoveries.
Current analysis reveals that profit-taking activity in the market is less intense than during earlier correction phases, such as the extended downturn earlier this year. This observation suggests that the ongoing correction, which has spanned over a month, could be shorter in duration. There are projections that Bitcoin might regain its upward momentum as soon as the first quarter of 2025. However, there is acknowledgment of potential volatility in the short term, with risks of additional sharp declines before any sustained recovery occurs.
As the market stands, Bitcoin is working its way back towards the $100,000 milestone, currently trading at approximately $99,494, representing a 2.7% increase over the past day, according to CoinMarketCap data. This price rise can be attributed not only to positive underlying metrics within the Bitcoin network but also to recent CPI data that saw a 0.4% increase in December, which in turn led to a significant decline in the US Dollar while other financial assets gained.
